SEC Hits Back at Richard Heart's Motion to Dismiss $1 Billion Hex Case

The United States Securities and Exchange Commission (SEC) has hit back at Richard Heart, the founder of the crypto project Hex, following his motion to dismiss a case alleging that he raised more than $1 billion by selling unregistered securities.

Last summer, Heart and three “unincorporated entities” that he controls were charged with “misappropriating millions of dollars of investor funds” raised from unregistered crypto asset security offerings, which generated more than $1 billion. This included using $12 million to buy luxury goods including “watches, cars, and the so-called largest black diamond in the world.”

The Hex founder’s legal team filed a motion to dismiss the lawsuit earlier this month, stating that Heart lives outside of the U.S. and did not sell products to American citizens. Today, the SEC made it clear that it disagrees.

“Heart argues that he can evade the Court’s exercise of personal jurisdiction because he lives abroad and claims he did not direct any activity at the United States,” the SEC filing explains, “The record, however, reflects Heart’s purposeful availment of the United States by creating a market for the offer, sale, and purchase of the Heart Securities here.”

Hex was a cryptocurrency that began marketing efforts in 2018, an earlier SEC complaint stated. The project was designed to reward those who acquired tokens early on, those who stake for longer, and those who refer other investors. This structure led to allegations that it was little more than a pyramid scheme. 

Despite Heart claiming that the project was never directed to American customers, a U.S. edition of The Economist ran an advertising campaign for the project that claimed the token rose in value by 11,500% in 129 days.

Where in the World Is Hex Founder Richard Heart?

The United States government is searching far and wide for Richard Heart, the controversial crypto founder it charged months ago with orchestrating an illegal $1 billion securities scheme.  And it can’t seem to find him.  In July, the Securities and Exchange Commission (SEC) accused Heart, whose actual name is Richard Schueler, with violating securities laws by selling and promoting a cryptocurrency, Hex, that he promised holders would become “the highest appreciating asset that has ever existed...

“Heart engaged in a targeted marketing campaign that was directed at U.S. investors,” the recent SEC filing said.

“Heart also failed to take any steps to ensure that the offerings he promoted would not be sold to U.S. investors,” the SEC lawyers added, “To the contrary, Heart made extensive ‘offers’ of the Heart Securities to U.S. investors—including through promotional and marketing statements.”

Mired in Controversy, A Film Gives HEX and Richard Heart the Hollywood Treatment

On a recent Friday evening at a downtown Los Angeles multiplex, a flock of men in bright neon weaved their way through crowds of pink-clad “Barbie” revelers and fedora-donning, would-be fathers of the atomic bomb, en route to a screening that featured their own hero. Their protagonist of choice was Richard Schueler, aka Richard Heart, the gaudy crypto shock jock best known for founding HEX—a cryptocurrency that gained both steam and fraud accusations in equal measure after launching in 2019 with...

In an immediate response from Heart’s legal team, they explain that the SEC’s response to his request for dismissal is just the latest episode in its “ongoing haphazard campaign to punish people who create or interact with blockchain technologies.” 

“Next up, oral arguments, Oct. 24th,” Heart posted on Twitter. “Code is speech. Blockchains are speech. Speech is a protected human right. Freedom of movement and assembly are also protected human rights.”

Edited by Stacy Elliott and Andrew Hayward