- In a document released on Thursday, the SEC contended that Richard Heart, the creator of Hex, should have his move to dismiss dismissed.
- Heart’s attorneys, however, contend that since securities are not at issue and that Heart resides overseas, the SEC’s case against him ought to be partially dropped.
In response to the complaint that was brought against Richard Heart, the founder of Hex, the U.S. Securities and Exchange Commission stated that it was within its rights to prosecute the matter.
Heart’s request for a dismissal ought to be rejected, according to the regulator. The agency’s July 8 filing, which was made public only on Thursday, was sent to the U.S. District Court for the Eastern District of New York.
The SEC lawyers filed a brief stating that Heart disregarded the well-pleaded accusations in the Complaint and the relevant law in his Motion asking the Court to dismiss all claims against him.
In 2023, Richard Schueler, the founder of Hex and PulseChain, also known as Richard Heart, was sued by the SEC on charges that he had raised over $1 billion through unregistered securities offerings and had used the money to purchase expensive cars, high-end clothing, and a rare black diamond known as The Enigma, which was worth over $4 million.
According to the SEC, Hex offers a staking feature that lets investors contribute Hex tokens that are subsequently locked up in exchange for additional Hex tokens at a later time. The SEC claimed in the lawsuit that Heart had promised investors a 38% return on their Hex tokens staking. It also stated that 94%–97% of the ETH transferred into that wallet was recycled through the so-called crypto asset trading mechanism, meaning that a large portion of the demand for Hex was fictitious.
In their move to have the SEC’s action dismissed, Heart’s attorneys have refuted the accusations, claiming Heart did not commit fraud because he made no promises to investors.
Because the Complaint does not identify any deceptive conduct, the SEC’s fraud accusations are deemed to be unfounded. According to the SEC, “investors invested more than $354 million of crypto assets in PulseChain,” and Mr. Heart is accused of using roughly $8.9 million of those assets to pay for opulent expenditures. However, because Mr. Heart made no promises on what would happen to the assets, the Complaint is unusually silent on the matter.
But according to the SEC’s most recent filing, Heart misled PulseChain investors by misappropriating money for his own opulent needs.
According to the SEC’s attorneys, Heart was aware that he had used investor money rather than real earnings from his businesses to buy his watches, automobiles, and massive black diamond.
Additionally, Heart’s attorneys contended that Heart does not reside in the United States and has not allegedly engaged in any behavior against the country.
In the July filing, the SEC retaliated against that as well, stating that Heart cannot evade the Court’s jurisdiction by just citing his foreign residence. The agency’s attorneys used a virtual presentation in Las Vegas, an in-person appearance in Miami, and intensive marketing to prospective U.S. investors as evidence for their claims.
The legal team representing Heart argued that Hex, PulseChain, and Pulse X are not securities or investment contracts. According to the attorneys, the three are decentralized blockchain technologies.
The attorneys claimed that Hex was developed as a better substitute for Bitcoin that was intended to “outperform” it. Similar to Bitcoin, which the SEC has acknowledged is not a security, Hex is said to have no intended or real functions except from the ones included in its software code. All that is implied by the Complaint is that users were only supposed to keep their Hex tokens in virtual “wallets” on the Ethereum network and utilize the previously specified software features.
Once more, according to the SEC, Heart offered Hex, Pulse, and Pulse X as securities and investment contracts.
The next hearing is set for October 24.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
