In a rare legal defeat for the U.S. Securities and Exchange Commission, the agency has formally dropped its fraud case against Richard Schueler, better known as Richard Heart, founder of the crypto projects HEX, PulseChain, and PulseX.
On April 21, the SEC informed the Eastern District Court of New York it would not amend its complaint, effectively bringing the case to a close.
“That brings the case to an end with a complete victory for Mr. Heart,” said David Kirk, partner at Kirk & Ingram LLP, who represented the HEX founder in an email to CoinDesk. “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.”
The court had previously dismissed the SEC’s initial complaint in February, citing a lack of jurisdiction.
Judge Carol Bagley Amon noted that Heart’s activities were not clearly targeted at U.S. investors, CoinDesk previously reported, undermining the SEC’s case.
“This is a victory for open-source software, cryptocurrency, and free speech. The SEC actually sued software code itself in this case, claiming it could be an alter ego of a person,” Heart posted on X. “This would have set a terrible precedent and caused perhaps multiple billions of dollars of damage to the vital open source and free software industry that powers most of the Internet and your speech on it.”
Though the regulator was granted an opportunity to amend the complaint, it declined to do so by the extended April 21 deadline.
The SEC had originally filed suit in July 2023, accusing Heart of raising over $1 billion through unregistered securities offerings.
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