SEC's Crypto Case Dismissed: Judge Rules Heart Beyond U.S. Jurisdiction

A federal judge in the U.S. has dismissed a lawsuit brought by the Securities and Exchange Commission (SEC) against crypto entrepreneur Richard Heart, ruling that the agency failed to establish personal jurisdiction over the Finland-based U.S. citizen. The decision, made by District Judge Carol Bagley Amon, found that the SEC did not demonstrate sufficient contacts between Heart and the U.S. related to his crypto projects Hex, PulseChain, and PulseX.

The court rejected the SEC's argument that Heart's virtual appearances at U.S. conferences established jurisdiction, noting that his presence focused on a different post-offering asset and was insufficient to establish personal jurisdiction. The court did not rule on whether Heart and his companies executed sales or offerings of securities under the SEC's purview, only that they exceeded U.S. authority.

In her ruling, Judge Amon wrote, "Here, unlike in PlexCorps, Heart's website contacts were not 'active.' The Complaint fails to allege that Heart facilitated transactions, collected credit card information, or entered into contracts with U.S.-based investors through his websites."

The SEC had alleged that Heart conducted unregistered crypto offerings, raising over $1 billion through Hex, PulseChain, and PulseX. The regulator claimed that Heart used deceptive "recycling" transactions to gain more tokens, falsely marketed high staking returns, and tried to evade securities laws by framing investments as "sacrifices." The SEC also alleged that Heart misappropriated at least $12.1 million of PulseChain investor funds for personal luxury purchases.

However, Judge Amon determined that Heart's online activities were not specifically directed at U.S. investors. The ruling stated, "The relevant online communications described in the Complaint during the offer periods consist of untargeted, globally available information." The judge has granted the SEC 20 days to file an amended complaint addressing the jurisdictional deficiencies.

In December, Interpol issued a red notice for Heart, a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action. However, it is important to note that a red notice is not an international arrest warrant, and it remains up to individual countries to decide whether to act on it.