The US Securities and Exchange Commission (SEC) has successfully challenged Richard Heart’s effort to dismiss a $1 billion securities fraud lawsuit, affirming its jurisdiction over the case. In an opposition brief filed on August 22 in a New York federal court, the SEC argues that Heart’s motion to dismiss fails to address the substantial allegations made in the lawsuit and overlooks important legal criteria.
Heart, the creator of Hex, had previously argued that the SEC had no authority over him because he lived outside the US and was not present in the country during the relevant time. However, the SEC maintains that it has the jurisdictional authority to proceed.
According to the SEC’s claims, from December 2019 to November 2020, Heart promoted Hex as a crypto asset security, describing it as a “blockchain certificate of deposit” that would yield increasing returns through staking. Investors were enticed by promises of exceptional gains, leading to $678 million in ETH investments. Despite these assurances, Hex’s value fell dramatically, dropping about 98.4% from its peak by July 2023.
The SEC’s allegations also encompass Heart’s subsequent projects, PulseChain and PulseX. The regulator contends that Heart raised over $354 million for PulseChain by soliciting “sacrifices” of crypto assets, which were allegedly used for personal luxuries such as high-end watches, cars, and a purportedly massive black diamond, rather than for the platform’s development. Additionally, Heart is accused of laundering approximately $217 million through a crypto mixer and misappropriating $12.1 million for luxury purchases.
Moreover, the SEC highlights that PulseChain and PulseX did not launch as promised until May 2023, long after the fundraising campaigns ended.
Heart’s defense also includes a free speech argument, suggesting that the SEC’s scrutiny of his blockchain comments infringes on his rights.
The SEC, however, has rejected this argument, calling it “untenable.”The SEC’s strong opposition reinforces its stance on maintaining regulatory oversight and addresses the seriousness of the claims against Heart as the case unfolds.
