Richard Heart faces a major setback in SEC lawsuit: Court refuses to dismiss the case

The U.S. Securities and Exchange Commission (SEC) successfully blocked the founder of a crypto project, Richard Heart, from dismissing the lawsuit against him. This judicial decision means the case will proceed rather than be dismissed by the court. In its official response, the SEC stated that Richard Heart “ignored well-substantiated allegations and applicable laws” in his application, indicating that the regulatory agency believes the case has a solid legal basis.

Core Allegations Against Richard Heart: Over $1 Billion in Unlawful Fundraising

As early as 2023, the SEC filed a lawsuit against Richard Heart (real name Richard Schueler), accusing him of illegally raising over $1 billion through unregistered securities offerings for three crypto projects—Hex, PulseChain, and PulseX. The agency detailed how Richard Heart’s actions violated U.S. securities laws.

Beyond the fundraising activities themselves, the SEC also accused Richard Heart of squandering investor funds to support a lavish lifestyle. According to the complaint, this included purchasing designer goods, luxury cars, and even a rare black diamond valued at over $4 million. These allegations aim to demonstrate improper use of investor funds by Richard Heart.

Richard Heart’s Legal Defense Strategies and Their Limitations

To counter these allegations, Richard Heart’s legal team has employed several defenses. They argue that Richard Heart did not make explicit profit promises to investors and emphasize that his projects (such as Hex and PulseChain) are decentralized, similar to Bitcoin. Additionally, they claim that Richard Heart resides outside the U.S., which should exempt him from SEC jurisdiction.

However, SEC attorneys strongly rebutted this argument. They pointed out that Richard Heart cannot simply avoid jurisdiction by living abroad. The SEC highlighted his multiple personal and virtual activities within the U.S., as well as marketing efforts targeting American investors, which are sufficient to establish SEC jurisdiction over the case.

Token Promises and Market Reality: A Significant Discrepancy

According to the SEC’s investigation, Richard Heart had promised potential investors that staking HEX tokens could yield returns of up to 38%. While this figure was highly attractive to investors, market realities have diverged sharply from these promises.

To date, PulseChain has attracted over $354 million in investments, but according to CoinMarketCap, PulseChain (PLS) has fallen 88.5% from its all-time high in May 2023. HEX tokens have also performed poorly, dropping more than 84% from their peak. The SEC states that these tokens are being litigated as unregistered securities, further contributing to their decline in value. This price collapse has caused significant losses for investors initially attracted by Richard Heart’s high-yield promises.

Case Outlook and Regulatory Significance

The SEC’s refusal to dismiss the lawsuit means Richard Heart must continue facing regulatory charges. This judicial decision sends a clear message to the crypto market: even well-known founders cannot evade U.S. securities laws through geographic location or technological features. The progression of the Richard Heart case will have far-reaching implications for the entire crypto fundraising and token issuance landscape.