The U.S. Securities and Exchange Commission has suffered a rare legal setback, as it has officially withdrawn its fraud allegations against Richard Schueler, also known as Richard Heart, the founder of several cryptocurrency projects, including HEX, PulseChain, and PulseX. The SEC notified the Eastern District Court of New York on April 21 that it would not revise its complaint, thereby ending the case.
According to David Kirk, a partner at Kirk & Ingram LLP who represented Heart, 'This outcome marks a complete victory for Mr. Heart. To the best of my knowledge, this is the first time a federal judge has completely dismissed an SEC enforcement action against a participant in the cryptocurrency industry.' The court had previously dismissed the SEC's initial complaint in February due to a lack of jurisdiction. As previously reported by CoinDesk, Judge Carol Bagley Amon stated that Heart's activities did not clearly target U.S.
investors, undermining the SEC's case. Heart commented on the outcome, stating, 'This is a victory for open-source software, cryptocurrency, and free speech.
The SEC essentially sued software code itself in this case, claiming it could be considered an alter ego of a person. This would have set a terrible precedent and potentially caused billions of dollars in damage to the vital open-source and free software industry that powers the internet and enables online speech.' Although the regulator was given the opportunity to revise the complaint, it chose not to do so by the extended deadline of April 21. The SEC initially filed the lawsuit in July 2023, alleging that Heart had raised over $1 billion through unregistered securities offerings.