Key Points:
- A U.S. federal judge dismissed the SEC’s case against Richard Heart, ruling that his cryptocurrency promotions were globally accessible.
- Heart was accused of misappropriating $12.1 million in investor funds for luxury items, including sports cars, Rolex watches, and a rare 555-carat black diamond.
A U.S. federal judge has dismissed a lawsuit filed by the Securities and Exchange Commission (SEC) against online entrepreneur Richard Heart. The court found insufficient links between his actions and the United States to justify the case.
Heart, the founder of HEX, was accused of raising over $1 billion through unregistered cryptocurrency offerings and misappropriating $12.1 million for luxury purchases.
Judge Dismisses SEC Lawsuit Against HEX Founder Richard Heart
Judge Carol Bagley Amon of the U.S. District Court in Brooklyn ruled on Friday that the SEC failed to prove Heart’s cryptocurrency promotions specifically targeted American investors.
The ruling highlights that Heart’s online communications were globally accessible rather than directed at the U.S. market. market. Furthermore, the judge noted that the tokens in question were not listed on U.S. exchanges, weakening the SEC’s jurisdictional claims.
The SEC had accused Richard Heart, also known as Richard Schueler, of promoting the Hex token, PulseChain network, and PulseX trading platform as lucrative investment opportunities. The regulator means that Heart misled investors with exaggerated claims, including promises of significant returns.
Additionally, the SEC asserted that he used investor funds to purchase luxury items, including McLaren and Ferrari sports cars, Rolex watches worth $3.02 million, and “The Enigma,” a rare 555-carat black diamond purchased for $4.28 million at a Sotheby’s auction.
Heart’s Legal Issues Extend Beyond U.S. Courts
Judge Amon’s decision emphasized that the SEC’s case relied on specific evidence of direct transactions with U.S. investors. investors. While the complaint suggested that some Americans may have invested in Heart’s projects, it did not establish that transactions occurred within the United States.
The court also found that any meaningful misappropriation of funds took place through digital wallets and platforms outside U.S. jurisdiction. The SEC now has the option to appeal the ruling or modify its complaint within 20 days.
The Hex token, which had been struggling alongside the broader cryptocurrency market, experienced a brief rally following news of the dismissal, surging over 70% in the past 24 hours and is trading at $0.00385.
Despite the legal victory in the U.S., Richard Heart remains entangled in legal troubles overseas. Finnish authorities detained him on September 13, 2024, on charges of tax fraud and assault, although he later disappeared from custody.
Interpol subsequently issued a Red Notice for his arrest on December 22. Finnish authorities have managed to seize $2.6 million worth of luxury watches allegedly abandoned by Heart.
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