Richard Heart's Securities Case Has Been Dismissed By the SEC

BREAKING NEWS - Richard Heart's SEC Case has just been dismissed.

On February 28th, 2025 an Order on Motion to Dismiss was signed by United States District Judge, Carol Bagley Amon.

This ended a 578 day legal battle between Richard "Heart" Schueler and the Securities and Exchange Commission.

What Was the Case About?

The original case involved the Securities and Exchange Commission (SEC) bringing charges against Richard J. Schueler, also known as Richard Heart, and his associated entities—Hex, PulseChain, and PulseX. The SEC accused them of violating the Securities Act of 1933 and the Securities Exchange Act of 1934.

Specifically, the charges related to the promotion, offering, and selling of unregistered crypto asset securities, and defrauding investors by misappropriating investor funds.

Why Was the Case Dismissed?

The case was dismissed primarily due to the court's findings that it lacked personal jurisdiction over Richard Heart and that the SEC failed to state a claim upon which relief could be granted. Key reasons for dismissal included:

1. Lack of Personal Jurisdiction: The court found that the SEC did not provide sufficient evidence to establish that Richard Heart had significant contacts with the United States in relation to the alleged securities violations. The court determined that the activities described by the SEC, including online marketing and promotion of the crypto assets, did not demonstrate that Heart purposefully availed himself of conducting activities within the United States. The court's analysis under the specific jurisdiction criteria concluded that Heart's conduct did not create a substantial connection with the forum state.
2. Failure to State a Claim: The court also found that the SEC's allegations did not sufficiently demonstrate that the transactions in question were domestic or that Heart made domestic offers of the crypto assets, which are necessary conditions for applying U.S. securities laws under the Morrison framework. Furthermore, the court noted the SEC's failure to respond to arguments regarding the "alter ego" theory of Hex, PulseChain, and PulseX, interpreting this as an abandonment of these claims.
3. Application of U.S. Securities Laws: The court addressed the challenge of applying traditional securities laws to crypto asset activities, especially when those activities have a global reach. It discussed the standards for determining personal jurisdiction and the application of U.S. securities laws to crypto asset transactions, including the Morrison framework and the Dodd-Frank Act, without definitively resolving which framework applies to SEC antifraud actions.

Overall, the dismissal was based on jurisdictional issues and the insufficiency of the SEC's arguments and evidence to support its claims against Heart and his associated entities under U.S. securities laws.