SEC's Crypto Case Dismissed: Judge Rules No U.S. Targeting

A federal judge has dismissed a lawsuit brought by the U.S. Securities and Exchange Commission (SEC) against Richard Heart, the founder of HEX, PulseChain, and PulseX. The judge ruled that the SEC lacked jurisdiction over the case because the project did not specifically target U.S. investors.

In her ruling, Judge Carol Bagley Amon stated that the online communications described in the SEC's complaint during the offer periods were "untargeted, globally available information." She noted that the SEC failed to provide sufficient evidence to suggest that Heart's online statements were purposefully directed towards the U.S. rather than a global audience.

Under U.S. securities law, the SEC must prove that a defendant intentionally engaged with the U.S. market. However, the court found that Heart's communications did not demonstrate a deliberate effort to solicit U.S. investors, as the tokens were not available on U.S. exchanges. The court also ruled that the participation of U.S. persons in the project did not give the SEC jurisdiction, as the complaint merely alleged an unspecified number of U.S.-based investors participated in the offerings without demonstrating that transactions occurred in the U.S.

The SEC has 20 days to appeal the ruling or amend it. This decision highlights the ongoing debate surrounding the regulation of cryptocurrencies and initial coin offerings (ICOs) in the U.S. and the challenges faced by the SEC in enforcing securities laws in the digital asset space.