What You Should Know
- A federal judge dismissed the U.S. Securities and Exchange Commission’s lawsuit against Richard Heart, founder of HEX, PulseChain, and PulseX, claiming lack of jurisdiction.
- The ruling asserted that the SEC could not prove that Heart’s online statements were specifically aimed at U.S. investors, a necessary condition under U.S. securities legislation.
A federal judge has dismissed the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Richard Heart, the founder of HEX, PulseChain, and PulseX, concluding that the agency lacked jurisdiction as the project did not specifically target U.S. investors.
“The relevant online communications described in the Complaint during the offer periods consist of untargeted, globally available information,” Judge Carol Bagley Amon stated in her decision. “The SEC failed to plead sufficient facts to suggest that Heart’s online statements were purposefully directed to the United States rather than a global audience.”
Under U.S. securities law, the SEC must demonstrate that a defendant has intentionally engaged with the U.S. market. The court determined that Heart’s communications were “untargeted, globally available information,” and did not showcase a deliberate attempt to attract U.S. investors, noting that the tokens were not listed on U.S. exchanges.
The court further ruled that U.S. participation did not provide the SEC with jurisdiction, asserting that the complaint merely stated that an unspecified number of U.S.-based investors took part in the offerings, but without proving that transactions took place in the U.S.
The SEC may appeal the verdict or amend it within a 20-day period.
