Crypto Founder Richard Heart Argues SEC $1B Fraud Lawsuit Infringes on Free Speech
On Tuesday, April 9, 2024, crypto founder Richard Heart, also known as Richard Schueler, argued in a Brooklyn federal court that the U.S. Securities and Exchange Commission (SEC) violated his free speech rights with its lawsuit against him.
Heart filed a motion to dismiss the SEC’s case, which accuses him of selling over $1 billion worth of unregistered digital asset securities and misappropriating customer funds through his Hex, PulseChain, and PulseX crypto projects. In the motion, Heart claimed the SEC is trying to “recast” his public commentary on livestreams as unregistered securities offerings, infringing on his freedom of expression.
The crypto entrepreneur, who currently resides in Finland, told the judge the SEC failed to show he has sufficient ties to the U.S. or that the assets in question qualify as securities. Heart argued most of the allegations stem from his public statements on open internet platforms that are akin to the modern public square.
Additionally, Heart claimed the SEC selectively reviewed a small portion of his hundreds of hours of live-streamed public commentary about blockchain technologies out of context. He said this was an attempt to “penalize him for expressing his views.” If granted, the motion warned the lawsuit could “trample over the rights” of thousands who freely express themselves through decentralized software and blockchain code.
The SEC sued Heart for allegedly raising over $1 billion by founding and promoting the three projects through YouTube videos where he said investors could profit. However, Heart argued the SEC presentation omitted necessary context and he “promised nothing” regarding customer funds.
Like other crypto defendants, Heart also disputed that the digital assets in the projects met the definition of investment contracts and therefore securities. The motion stated the SEC relied on “conclusory assertions” about investors’ reasonable expectations rather than evidence of promises tied to the assets.
Heart is asking the court to dismiss the case, asserting it exceeds the SEC’s jurisdiction and violates his constitutional free speech protections. If the motion is denied, the briefings will continue until August due to the judge’s individual rules.
In a post on the social network X, Heart encouraged other crypto companies to file briefs in support, calling it “a wonderful place to make a stand” regarding issues of free speech, open-source software, and regulatory overreach in the industry.
Please contact BlockTribune for access to a copy of this filing.
