In a significant legal development, a federal judge has ruled in favor of Richard Heart, the founder of HEX, PulseChain, and PulseX, by dismissing the lawsuit initiated by the U.S. Securities and Exchange Commission (SEC). The court determined that the SEC did not have jurisdiction over Heart's projects, asserting that they did not specifically target U.S.
investors, which is a crucial factor in such cases. Judge Carol Bagley Amon, presiding over the case, emphasized that the online communications referenced in the SEC's complaint were accessible to a global audience rather than being directed specifically toward the United States. This decision highlights a pivotal moment in the regulatory landscape surrounding digital assets and the enforcement actions taken by the SEC. According to U.S.
securities law, the SEC is burdened with demonstrating that a defendant has intentionally engaged with the U.S. market. In this instance, the court found that Heart's communications were neither targeted nor limited to U.S. residents, ultimately failing to establish a conscious effort to solicit U.S.
investors. Moreover, the ruling indicated that the cryptocurrencies associated with Heart's ventures were not available on any U.S. exchanges, a factor that significantly undermined the SEC's argument. The judge also scrutinized the claims regarding U.S. persons participating in the projects, noting that the SEC's argument merely mentioned that an unspecified number of U.S.-based investors may have been involved.
However, the complaint lacked concrete evidence that any transactions took place inside the United States, which is essential for the SEC to assert jurisdiction in similar cases. In light of this ruling, the SEC now faces the choice of whether to appeal the decision or to amend its complaint within a 20-day timeframe, leaving the future of regulation in this space uncertain..