The US Securities and Exchange Commission (SEC) is proceeding with its action against Richard Heart, the founder of Hex and PulseChain, rejecting his attempts to get the case dismissed. The SEC accused Heart, whose real name is Richard Schueler, of generating more than $1 billion through unregistered securities offerings and spending the money on luxury items such as a rare $4 million black diamond known as The Enigma.

The lawyers of Heart had previously motioned to dismiss the lawsuit stating that he never defrauded the investors since he never made any specific promises to them. They also argued that because Heart lives in another country and did not take his actions towards the US, the SEC cannot prosecute him. However, the SEC refuted these two arguments in its filing with U.S. District Court, Eastern District of New York on July 8, which was made public on Thursday.

SEC Alleges Fraud in Hex Staking Scheme; Heart Denies Claims

According to the SEC’s complaint, Hex, which contains a staking option, was promoted as an investment plan involving the staking of tokens to generate profits. It was said that through staking Hex tokens, investors could gain as much as 38% returns. The SEC also alleged that many of the Hex purchases were fraudulent and that most of the funds were circulated through a digital token trading platform.

According to Heart’s defense, Hex, PulseChain, and Pulse X are decentralized blockchain technologies and not investment contracts or securities. They likened Hex to Bitcoin, which the SEC has not categorized as a security, arguing that Hex tokens were intended to be held on digital wallets without any expectation or guarantee of profits.

In response, the SEC continued that it was accurate that these offerings constituted investment contracts and were, therefore, properly regulated. The agency also noted that Heart has been traveling to the U.S., including Miami and Las Vegas, to promote these projects that support the jurisdiction’s claim. The next hearing for this case is set for October 24, when these debates will be continued.

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