- The SEC’s lawsuit against Richard Heart has been dismissed due to lack of jurisdiction
- Heart was accused of selling unregistered crypto securities and misusing investor funds
- The ruling questions the SEC’s authority over foreign-based crypto projects like PulseChain and Hex
A federal judge has dismissed the Securities and Exchange Commission’s (SEC) lawsuit against Richard J. Schueler, also known as Richard Heart, citing lack of jurisdiction. Judge Carol Bagley Amon agreed with Heart’s argument that, despite being a U.S. citizen, the SEC did not have jurisdiction over him, given that he is based in Finland and operates from there. The agency accused Heart of using investor money for his own ends, including the purchase of luxury cars and clothing, through his Hex vehicle.
Heart Never Served
The SEC filed its lawsuit in August 2023, alleging that Heart and his projects—Hex, PulseChain, and PulseX—violated U.S. securities laws by raising hundreds of millions of dollars without proper registration. The agency also accused Heart of using $12.1 million in investor funds for luxury purchases, including cars, watches, and diamonds.
The SEC faced immediate difficulties, given that they could not locate Heart to actually serve him with the papers, but they managed to do this in October 2023.
Nevertheless, Heart filed a motion to dismiss, arguing that the SEC had no jurisdiction over him or his projects, which operated outside of the United States. His legal team filed a motion to dismiss on these grounds.
Heart’s Actions Not U.S.-specific
In the ruling, Judge Amon granted Heart’s motion to dismiss, stating that the SEC failed to establish personal jurisdiction over him, finding the following:
- Heart’s crypto projects were not explicitly targeting U.S. investors in a way that would justify SEC oversight
- Heart’s online marketing and social media posts were globally accessible but not directed specifically at U.S. buyers
- The SEC did not provide sufficient evidence that transactions in Hex, PulseChain, or PulseX occurred within the U.S.
The ruling emphasized that the SEC cannot assume authority over foreign-based crypto projects unless there is a clear connection to U.S. markets.
This dismissal raises major questions about the SEC’s reach over international crypto projects. Some experts see it as a blow to the SEC’s crackdown on unregistered digital assets, while others believe it may push U.S. lawmakers to provide clearer crypto regulations.
This case could set a precedent for how courts view jurisdiction in crypto enforcement cases and raises the question of whether or not the SEC can regulate foreign-based projects like Heart’s, potentially leading to other crypto founders following his model to avoid U.S. oversight.
