SEC Drops Fraud Case Against HEX Founder Richard Heart in Rare Defeat

In a rare legal setback, the U.S. Securities and Exchange Commission (SEC) has dropped its fraud case against Richard Schueler, known as Richard Heart, the founder of cryptocurrency projects HEX, PulseChain, and PulseX. The SEC notified the Eastern District Court of New York on April 21 that it would not amend its complaint, effectively ending the case.

Originally filed in July 2023, the SEC had accused Heart of raising over $1 billion through unregistered securities offerings. However, in February, U.S. District Judge Carol Bagley Amon dismissed the initial complaint, citing a lack of jurisdiction. The court found that Heart’s activities were not clearly aimed at U.S. investors, weakening the SEC’s claims.

David Kirk, Heart’s attorney from Kirk & Ingram LLP, called the dismissal a “complete victory,” highlighting it as the only known crypto enforcement case fully dismissed by a federal judge. The SEC had the opportunity to refile but chose not to before the April 21 deadline.

Heart celebrated the decision, stating on X (formerly Twitter) that the SEC’s attempt to target software code as a legal entity could have harmed the open-source software community and digital free speech. He argued that the case, if successful, might have set a dangerous precedent and damaged the broader internet infrastructure reliant on open-source tools.

This dismissal marks a significant moment in crypto regulation, underscoring legal limits on the SEC’s reach and reinforcing the distinction between software development and securities law. It also brings relief to decentralized project developers wary of regulatory overreach.