Federal Judge Dismisses SEC Lawsuit Against Cryptocurrency Founder
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A U.S. federal judge has ruled-out a law case filed by the Securities and Exchange Commission (SEC) against Richard Heart, a cryptocurrency entrepreneur accused of raising over $1 billion through unregistered digital asset offerings. The SEC also accused the entrepreneur of misappropriating a sum of $12.1 million of investor funds to buy luxury items, which includes a rare black diamond.
To this end, Judge Carol Bagley Amon ruled that the case lacked a strong connection to the United States, as the alleged transactions and misappropriations happened outside the country.
SEC’s Claims Against Richard Heart
Recently, the SEC has accused Heart, whose real name is Richard Schueler, of misleading investors by promoting his cryptocurrency projects (Hex, PulseX, and PulseChain). According to the SEC, he promised extraordinary financial returns and claimed his Hex token was designed to be the “highest appreciating asset in history.” However, a disclaimer was added that his offerings were not securities, therefore, the SEC argued that these statements were deceptive.
Also in the same case, the SEC accused Heart misused investors’ funds by purchasing luxury items instead of further developing his projects. According to SEC, these purchases include high-end sports cars, expensive watches, and a 555-carat black diamond known as “The Enigma.” Therefore, the SEC argued that these actions can tagged fraudulent and erode investor trust.
Court’s Ruling and Its Impact
However, Judge Amon has dismissed this case stating that the SEC failed to provide evidence that Heart’s activities specifically are towards investors in the United States.
According to the court rulings, his promotions were made online, they reached a global audience rather than a U.S.-focused one. Furthermore, the transactions in question occurred through international digital wallets and platforms with unclear ties to the United States. This lack of jurisdiction led to the case being thrown out.
Therefore, the ruling is seen as a setback for the SEC’s efforts to regulate cryptocurrency projects operating on a global scale. It raises questions about how U.S. regulators can effectively oversee decentralized finance when transactions often occur beyond their reach.
To this end, some crypto community view this decision as a victory, supporting the idea that not all digital asset projects fall under U.S. securities laws. However, it remains uncertain whether the SEC will adjust its approach or continue pursuing similar cases in the future.
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