A district court judge has dismissed the US securities regulator’s lawsuit accusing Hex founder Richard Heart of raising over $1 billion through unregistered crypto offerings and defrauding investors of $12.1 million.
Heart, whose real name is Richard Schueler, was also accused of spending those allegedly stolen funds on luxury items — including the world’s largest black diamond.
However, Judge Carol Bagley Amon said those alleged deceptive acts couldn’t be decided on as the Securities and Exchange Commission failed to establish that the US had jurisdiction over Heart’s crypto activities — which she said were global in scope and not specifically targeted at US investors.
“The alleged misappropriation occurred through digital wallets and crypto asset platforms, none of which were alleged to have any connection with the United States,” Amon said in the Feb. 28 court ruling.
“To the extent the Complaint shows that Heart misappropriated investor funds through deceptive mixer transactions, those actions occurred entirely outside of the United States,” Amon added.
The crypto tokens that the SEC alleged were unregistered securities included PulseChain (PLS), PulseX (PLSX) and HEX (HEX) — which have increased around 36%, 67% and 78%, respectively, since Amon made the verdict.
Heart acknowledged that winning a securities-related court case over the SEC was rare, adding that he is now relieved to see the Pulse and Hex coins flourish.
“HEX has operated flawlessly for over 5 years. Today’s decision in favor of a cryptocurrency founder and his projects over the SEC brings welcome relief and opportunity to all cryptocurrencies,” Heart said in a Feb. 28 X post.
Eight of Schueler’s watches were seized by Finnish authorities. Source: Finland Police
Amon, however, stated that the SEC can amend the “deficiencies” found in its complaint by refiling within the next 20 days (by March 20).
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In addition to purchasing “The Enigma” — a 555-carat black diamond costing 3.16 million British pounds ($3.97 million) — the securities regulator also accused Heart of spending investor funds on McLaren and Ferrari sports cars and four Rolex watches costing $3.02 million between August 3, 2021, and September 2022.
Heart, a US citizen believed to be living in Finland, isn’t entirely out of legal trouble.
On Sept. 13, 2024, Finnish authorities remanded Heart into custody following allegations of tax fraud and assault. However, the relevant authorities have been unable to locate him.
A few months later on Dec. 22, Interpol issued a Red Notice for Heart based on the same allegations.
Finnish authorities were, however, able to seize around $2.6 million worth of watches that he is believed to have abandoned.
Eight of Heart’s watches were seized by Finnish authorities. Source: Finland Police
While authorities are still unable to locate Heart, he remains active on social media, continuing to promote his cryptocurrencies on X and upload videos to his YouTube channel.
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