At the center of Heart’s defense was the assertion that the SEC does not have jurisdiction over him or his entities, arguing that U.S. courts should not have authority over HEX, Pulsechain, and PulseX.
Heart’s legal team emphasized that although Heart grew up near Pittsburgh, Pennsylvania, he has since lived abroad in Finland and other locations, making the U.S. jurisdictional claims invalid for the period in question.
Heart also argued that decentralized projects like HEX, which operates as open-source software, should not be subject to U.S. securities laws.
Challenging the Jurisdiction of the SEC Lawsuit
The primary focus of Heart’s defense on Thursday was the issue of jurisdiction. Heart’s attorney spent the majority of their time arguing that the SEC’s claims were unfounded because the agency could not prove that the transactions involving HEX, Pulsechain, or PulseX involved U.S. securities.
They also contended that the SEC failed to meet legal filing requirements and did not sufficiently demonstrate that the transactions met the U.S. Supreme Court’s Howey Test, which determines whether a transaction qualifies as a security.
One of the spectators at the trial, identified as a “Hexican” (a passionate supporter of HEX), commented on the proceedings, stating that it seemed they were “almost winning” on the jurisdiction issue.
The spectator emphasized the idea that it would be impossible to sue open-source software, which is how HEX operates.
While the crowd’s opinion carries weight among supporters of Heart, it is ultimately up to the judge to decide whether the SEC has jurisdiction over these entities. As of now, the judge has yet to issue a ruling on the jurisdictional issue.
Further complicating the SEC’s case, the spectator noted that the SEC’s timeline of events contained several errors, which they believe undermined the agency’s position. These alleged mistakes could potentially weaken the SEC’s argument in court.
The Allegations of Fraud
Beyond challenging the jurisdictional claims, Heart’s legal team also addressed the SEC’s fraud allegations. The SEC has accused Heart of using investor funds for personal gains, including selling contributions made by HEX investors in ETH and other cryptocurrencies to purchase luxury goods such as watches.
Heart’s defense team strongly rejected these claims, highlighting his consistent public statements that HEX investors should not expect profits from the efforts of others.
Heart’s lawyers presented his disclaimers as critical in mitigating any potential accusations of fraud. They argued that by clearly stating that HEX was not an investment scheme, Heart had taken reasonable steps to prevent any misunderstandings among investors.
Throughout the proceedings, Heart’s attorneys reiterated that there was no fraudulent intent behind the actions of Heart or his projects.
They also contended that since HEX and the other projects are decentralized, it would be inappropriate to treat them as securities under U.S. law.
The defense suggested that the SEC’s approach is overly broad and fails to consider the unique nature of blockchain technology and decentralized finance.
What’s Next for Richard Heart and HEX?
In the coming days, Judge Amon will determine whether the SEC’s case against Heart will move forward. The judge has the option to accept or deny Heart’s motion to dismiss the case either in part or entirely.
If the judge rules in favor of Heart, it could set a significant precedent for the future of cryptocurrency regulation, particularly for decentralized projects like HEX, Pulsechain, and PulseX.
For now, supporters of Heart and his projects remain optimistic that the legal system will acknowledge the distinct nature of blockchain technology and the need for a more nuanced approach to regulation.
As the case progresses, both the legal community and the crypto world are watching closely to see how this landmark case will unfold.
