- The SEC filed a complaint against Heart in July 2023 but could not serve court papers.
- Heart responded to the complaint by filing to dismiss the case.
- Heart’s legal team claims the SEC’s allegations are meritless.
The legal clash between the Securities Exchange Commission (SEC) and Richard Heart escalated this week, with Heart’s 11-person legal team firing back against allegations he perpetrated a $1 billion unregistered securities fraud. The SEC complaint filed last July accused Heart of illegally touting his Hex, PulseChain, and PulseX blockchain projects as profit-generating investments violating securities laws.
According to court filings, despite tracing him to Helsinki, Finland, the SEC could not serve Richard Heart with court papers. The filings indicate that Heart had purposely evaded contact, leading some to speculate that he was on the run from US authorities. However, on January 9, Heart finally responded via his legal team, calling for the “meritless” case to be dismissed.
SEC Overreach, Claims Heart
Heart’s legal team reframed the SEC’s allegations as another attempt by the agency to stifle blockchain technology in contravention of free speech and constitutional rights. The team requested a pre-motion conference calling for Judge Amon to dismiss the complaint.
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In support of the dismissal, Heart’s legal team blasted the regulator’s “Substitute Service” in Finland, claiming that leaving papers at a local police station failed to qualify as proper notification of litigation. Moreover, it was also contended that the SEC holds no jurisdiction as Heart has not lived or conducted business in the US for over ten years.
Regarding the securities violation charges, Heart’s lawyers maintained that the SEC’s complaint is fatally flawed since none of the purported security transactions occurred within US borders, investment contracts between Heart and token purchasers do not exist, and nor were investors promised profits or returns, making the matter outside of federal securities laws.
Heart’s counsel has alleged that the SEC is overreaching by seeking to penalize Heart’s involvement with open-source software like the Hex, PulseChain, and PulseX blockchains. Heart’s lawyers have concluded that this “transformative expansion” of the SEC’s power over digital assets absent of congressional authority grounds case dismissal.
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Reacting to the rebuttal, Heart’s supporters have overwhelmingly backed him in his fierce counterattack against the SEC over social media.
Heart Supporters Call Unity
Heart’s supporters took to social media, cheering his decision to face off against the SEC. One enthusiastic X user even suggested that Heart’s response is evidence that he was never on the run from US authorities but rather positioning himself to prepare for “fighting for everyone’s rights” against heavy-handed regulation.
Other social media commentary echoed similar sentiments, with users calling for unity behind Heart at this critical time. One tweet called on the crypto community to unite and throw their weight behind Heart, portraying the SEC complaint as an existential threat.
On the Flipside
- The SEC has aggressively targeted crypto projects over violating securities laws, but the definition of “security” in crypto is complex, with room for debate.
- The SEC’s X account was hacked, and fake news of BTC ETF approvals was posted. This led to volatile market swings and strong criticism of the agency’s security practices from the crypto community.
- At the time of writing, HEX, PulseChain, and PulseX are up 48.1%, 20.8%, and 35.7%, respectively, over the last 24 hours. However, the tokens are down 98.4%, 74.5%, and 82.2%, respectively, from all-time highs.
Why This Matters
Heart’s vigorous self-defense has raised complex issues around securities definitions, jurisdiction, decentralization, and regulating borderless blockchain technologies. The timing of the rebuttal was fortunate, catching the SEC at a vulnerable point following the X account hack. This has positioned Heart well to rally support against the agency.
Read about Heart dodging US authorities, leading to “substitute service” of court papers here:
SEC Serves Richard Heart over Crypto Securities Violations
Find out more on dwindling privacy token liquidity following OKX delistings here:
OKX Delisting Compounds Privacy Token Liquidity Woes
