SEC Challenges Richard Heart’s Motion to Dismiss Over Alleged $1B Securities Fraud

• SEC asserts U.S. jurisdiction over Richard Heart, challenging his overseas residence defense.
• Allegations involve misuse of $8.9M in investor funds, including luxury purchases like a rare diamond.
• Legal debate focuses on whether Hex, PulseChain, and PulseX qualify as securities under U.S. law.

The U.S. Securities and Exchange Commission (SEC) is responding to an attempt by Richard Heart, the founder of Hex, to dismiss a lawsuit accusing him of defrauding investors. 

Heart, whose real name is Richard Schueler, allegedly raised over $1 billion through unregistered securities tied to Hex, PulseChain, and PulseX. The SEC’s recent filing urges the U.S. District Court for the Eastern District of New York to deny Heart’s motion, citing substantial evidence of his involvement in fraudulent activities.

Heart’s legal defense argues that the SEC lacks jurisdiction, as he resides outside the United States and did not specifically target U.S. investors. However, the SEC counters this by stating that Heart has engaged with U.S. 

Investors both physically and virtually fall under U.S. jurisdiction. The regulatory body further asserts that Heart cannot evade legal responsibility by residing abroad, emphasizing that his actions have directly impacted U.S. investors.

Central to the SEC’s case is the accusation that Heart misused approximately $8.9 million of investor funds from PulseChain for personal luxury purchases. These purchases included high-end items such as Ferraris, Gucci products, and the Enigma, a rare black diamond valued at $4.3 million. 

Heart’s defense contends that Hex, PulseChain, and PulseX are decentralized blockchain technologies, not investment contracts, and should not be classified as securities. They draw parallels to Bitcoin, which the SEC does not consider a security. 

However, the SEC maintains that Heart marketed these tokens as investment opportunities, thus bringing them under the purview of U.S. securities law. 
The case has attracted attention within the cryptocurrency community, with prominent influencer Ben Armstrong, known as BitBoy, defending Hex in a recent video. Armstrong argued that Hex’s staking model has consistently rewarded users despite the legal challenges facing its founder.