protos.com
HEX founder Richard Heart has finally filed his Motion to Dismiss in the Eastern District of New York. Heart has been preparing to write the document — probably the most important he has ever written — for years.
The filing requests US District Court Judge Carol Bagley Amon to toss out the Securities and Exchange Commission’s (SEC) lawsuit against him and his three crypto projects: HEX, PulseChain, and PulseX.
Heart (real name Richard Schueler) founded HEX — which currently sits 98% down from all-time highs — and is also behind blockchain token PLS and exchange token PLSX. These are both also trading far below their all-time highs.
The SEC claims that Heart sold all three tokens to investors in unregistered securities transactions and raised over $1 billion in violation of US law. To protect US residents from further harm and fraud, commissioners have requested disgorgement of ill-gotten revenue, accumulated interest, fines, and permanent injunctions.
Read more: Crypto Twitter dunks on Richard Heart over a 2-year-old HEX ‘rug pull’
Most important document of Richard Heart’s career
A motion to dismiss is a defendant’s first, formal argument to a judge on why a lawsuit should be terminated. The document usually argues that the plaintiff has failed to adequately allege jurisdiction, grounds, and other matters of fact and law.
In his motion to dismiss, filed by his lawyers at Quinn Emanuel, Heart claims that he’s resided abroad and didn’t aim any securities offerings at US investors. He also claims that neither of his three tokens created any investment contract. Finally, he says that his speech and crypto activities are protected by the First Amendment of the US Constitution.
All of these claims, in the HEX, PulseChain, and PulseX founder’s opinion, mean that the SEC has insufficient jurisdiction and grounds to sue.
Another motion to dismiss from a crypto promoter
Topically, the arguments are similar to many other motions to dismiss by crypto executives. A tiny number of these arguments have prevailed while the vast majority have failed. Despite a decade of anti-SEC rhetoric by hundreds of crypto defendants, the SEC has won almost every lawsuit it has filed against crypto promoters.
Of course, the particulars of each case matter. To review Heart’s unique actions, a senior District Court judge will be weighing arguments from government attorneys and Quinn Emanuel attorneys.
Heart has been aware of legal opinions that HEX likely violated US laws since at least 2019. He spoke with attorney Jason Seibert for hours during a legal review of HEX, wherein Seibert told Heart that he believed in “evidence of an unregistered offering on nearly day one. He basically admitted to violations on day one.”
Undeterred, Heart continued promoting HEX for years. He doubled down by founding other crypto assets, PulseChain and PulseX and now awaits a US court ruling on whether his actions were lawful.