Key takeout
- The court dismissed the SEC's case against Richard Hart because of the lack of personal jurisdiction.
- The SEC was unable to prove that Heart's Crypto transactions are domestically qualifying under US securities laws.
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The US District Court for the Eastern District of New York has dismissed the SEC lawsuit against Hex founder Richard Schuler and his encryption projects Hex, Pulsechain and Pulsex, near Richard Hart.
“I am grateful for the careful judgment of Judge Amon for dismissing all the SEC's claims against me. This type of victory over the SEC is extremely rare. Pulsechain, Pulsex and Hex should be allowed to flourish, not securities. Hex has been operating perfectly for over five years,” the heart said in a statement following the court's ruling.
In July 2023, the SEC filed a complaint against Hart, accusing him of selling unregistered cryptocurrency securities in violation of federal securities laws. The regulator also alleged that the founder of HEX misused investor funds for personal luxury purchases, including cars, watches and diamonds.
Following the SEC's move, Heart filed a motion to dismiss the lawsuit. He argued that the Securities Watchdog had stepped over regulatory boundaries and failed to fully prove a violation of the Securities Act.
In a court order dated February 28, the judge granted the dismissal on the basis of a lack of jurisdiction for an individual. The court found Hart's marketing and sales activities were not specifically directed towards the United States, but were inherently global.
The court also held that the SEC failed to prove a cardiac crypto transaction that was recognized as a “domestic transaction” under the US Securities Act.
The ruling noted that postoffer marketing activities, including meetings and social media involvement, were not relevant as new securities were not on sale during that period. The court also found that Hart's website and online promotions are not interactive enough to establish jurisdiction.
The SEC's fraud claim regarding the misappropriation of Pulsechain was dismissed as alleged fraud occurred outside the United States. Regulators have failed to demonstrate that a heart transaction took place in the US or that fraud had a major impact in the country.
“Today's decision to support cryptocurrency founder and his project around the SEC brings welcome relief and opportunities to all cryptocurrencies. We would like to thank President Trump for supporting cryptocurrencies,” Hart said.
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