The US Securities and Exchange Commission has firmly opposed Hex founder Richard Heart’s motion to dismiss the $1 billion securities fraud lawsuit filed against him. The SEC argued that Heart’s attempt to dismiss the lawsuit does not adequately address the allegations laid out in the complaint and ignores established legal standards. The regulator emphasized its jurisdiction over the case, refuting Heart’s claim that the SEC lacks authority due to his residence abroad and alleged absence in the US during the relevant period.
According to the official SEC document, from December 2019 to November 2020, Heart promoted Hex as a crypto asset security, marketing it as a “blockchain certificate of deposit” with the promise of consistently increasing token holdings through staking. Investors were drawn in by Heart’s promises of high returns and his assertion that Hex was the “highest appreciating asset ever.” Despite attracting investments worth $678 million in ETH, Hex’s value purportedly plummeted by approximately 98.4% from its all-time high as of July 2023.
The allegations against Heart extend to his subsequent projects, PulseChain and PulseX. The SEC accused Heart of raising over $354 million for PulseChain by soliciting crypto asset “sacrifices,” which were allegedly used for personal luxuries such as high-end watches, cars, and a large black diamond. Rather than channeling the funds into platform development, Heart supposedly misappropriated $12.1 million for luxury purchases. The SEC also noted that PulseChain and PulseX failed to launch as promised until May 2023, long after the fundraising periods had concluded.
The SEC highlighted Heart’s extensive marketing efforts directed at US investors, pointing out his virtual appearances at conferences in Las Vegas and an in-person interview on a Miami-based podcast. These actions underscored the regulator’s argument that the case falls under US regulatory oversight. Despite Heart’s assertion that the SEC’s case infringes on his free speech rights, the regulator maintains that the use of his commentary to allege securities offerings does not impede protected speech on the blockchain.
The SEC’s opposition to Richard Heart’s dismissal motion underscores the seriousness of the allegations of securities fraud and misconduct. The regulator’s assertion of jurisdiction and detailed rebuttal of Heart’s arguments demonstrate a proactive approach to holding individuals accountable for deceptive practices within the cryptocurrency space.
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