SEC Drops $1B Crypto Case Against HEX Founder Richard Heart

On April 21, the SEC notified the U.S. District Court for the Eastern District of New York that it would not amend its complaint against Heart, effectively bringing the case to a close.

The SEC had accused Heart of raising over $1 billion through unregistered cryptocurrency offerings and misappropriating at least $12.1 million for personal luxuries, including high-end cars, watches, and a 555-carat black diamond known as "The Enigma."

However, in a February 28 ruling, U.S. District Judge Carol Bagley Amon dismissed the SEC's complaint, stating that the agency failed to establish that Heart's activities had sufficient ties to the United States. The judge noted that Heart's online promotions were directed to a global audience and that there was no evidence of transactions with U.S.-based investors.

David Kirk, Heart's attorney and partner at Kirk & Ingram LLP, hailed the dismissal as a complete victory. "To my knowledge, this is the only SEC enforcement action against a participant in the cryptocurrency industry that was dismissed in its entirety by a federal judge," Kirk said in a statement.

Heart himself commented on the ruling, emphasizing its significance for the broader cryptocurrency community. "HEX has operated flawlessly for over five years. Today's decision in favor of a cryptocurrency founder and his projects over the SEC brings welcome relief and opportunity to all cryptocurrencies," he posted on social media.

Following the dismissal, tokens associated with Heart's projects experienced significant gains. HEX surged nearly 80%, while PulseChain (PLS) and PulseX (PLSX) saw increases of approximately 36% and 67%, respectively.

Despite this legal victory in the United States, Heart's legal troubles are not over. Finnish authorities have issued a warrant for his arrest on charges of tax fraud and assault. In December 2024, Interpol issued a Red Notice for Heart. Finnish police have also seized luxury watches worth approximately $2.6 million from a property associated with him.

Heart remains active on social media platforms, continuing to promote his cryptocurrency projects, despite being wanted by international law enforcement agencies.

The dismissal of the SEC's case against Heart underscores the challenges regulators face in asserting jurisdiction over decentralized and globally accessible cryptocurrency projects. Legal experts suggest that this case may influence how future regulatory actions are approached, particularly concerning the need to establish clear connections to U.S. investors and markets.

As the cryptocurrency industry continues to evolve, the balance between innovation and regulation remains a critical and ongoing conversation.