The U.S. Securities and Exchange Commission (SEC) is refusing to let Richard Heart dismiss a $1 billion lawsuit. Hex’s founder, Heart, believes that the SEC does not have authority in his case and that no securities were involved.
In a recent court filing, the SEC requested the U. S. District Court for the Eastern District of New York to deny Heart’s motion. Heart, whose real identity is Richard Schueler, has been charged with securities fraud involving the sale of unregistered securities on Hex, PulseChain, and Pulse X.
The SEC alleges that Heart used about $8.9 million from the PulseChain investors to buy luxury items such as Ferraris and a black diamond known as the Enigma that he bought for $4.3 million.
The agency also accuses Heart of falsely promoting Hex as a high-yield staking platform through which investors could earn 38% more tokens. However, it speculates that most of the demand for Hex was fake, with 94% to 97% of the Ethereum deposited being pumped back into crypto exchanges.
Heart’s defense is that he resides in another country and that his activities were not directed toward the U.S., thus questioning the jurisdiction of the SEC. However, the SEC argues that Heart’s physical and virtual operations in the U.S., including advertising, support their case.
Similarly, the Ninth Circuit Court of Appeals recently partially overturned the dismissal of a class-action lawsuit against Binance US, which alleges that the exchange has manipulated the price of HEX.
Heart’s lawyers argue that Hex, PulseChain, and Pulse X are decentralized technologies, not investment contracts, and should not be considered securities.
They equate Hex to Bitcoin, which the SEC does not regard as a security. Nevertheless, the SEC continues to argue that all of Heart’s offerings fall under the definition of securities under U.S. law.
HEX was also defended by cryptocurrency influencer Ben Armstrong, who goes by the name BitBoy, stating that while the founder of the project may be in legal trouble, the staking mechanism has always been profitable for HEX users.