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On Thursday, an Eastern District of New York courtroom filled with over 70 bystanders to hear Richard Heart’s lawyers argue his case for dismissing the SEC’s lawsuit against him and his crypto projects HEX, Pulsechain, and PulseX.
At the outset, Heart’s lawyers contested jurisdiction, asking the judge to dismiss the lawsuit entirely because, in Heart’s view, the SEC lacks jurisdiction over him and the entities it is suing.
Heart says that, although he grew up near Pittsburgh, Pennsylvania, he lived in Finland and elsewhere abroad during the time periods in question. Moreover, he believes the unincorporated entities HEX, Pulsechain, and PulseX are not subject to the jurisdiction of US courts.
First order of business: Jurisdiction
Heart’s lawyers used a considerable portion of Thursday’s oral argument to argue their stance on the SEC’s lack of jurisdiction. They explained why Heart believes the SEC did not plausibly allege a domestic securities transaction, failed to satisfy pleading requirements, and failed to plausibly allege how HEX, Pulsechain, and PulseX transactions passed the US Supreme Court’s Howey Test.
According to one “Hexican” who attended the hearing live, “We pretty much won on that front that this is out of the SEC’s jurisdiction. You know, obviously you can’t sue open-source software.” Of course, whether or not the SEC has jurisdiction is up to the judge, not bystanders. She has not yet filed her determination.
That bystander also claimed that the SEC’s chronology of events contained errors that weakened the commissioners’ case during Thursday’s hearing.
For context, that same bystander soon fawned that Heart’s lawyers “adjusted the syntax of my mind” as “a chill ran up my spine.” He claimed the SEC was trying to “take away people’s right to transact” and glowed about how “it really felt we were part of something really special. I feel like Richard Heart changed the syntax of how the legal system is going to have to grapple with this new technology.”
Read more: Finland wants to detain Richard Heart, alleges millions in unpaid taxes
Next steps for HEX and Heart’s motion to dismiss
After discussing jurisdiction, Heart’s lawyers asked the judge to discredit the SEC’s fraud claims.
The SEC’s stance is that Heart committed fraud by using investor funds for personal gain, selling Hexicans’ contributions of ETH and other altcoins to buy personal luxuries like watches.
Heart’s lawyers spent most of their time focusing on his repeated reminders to his fans that they should never expect to profit from the efforts of others. These prominent disclaimers, in addition to other factors, allegedly discredit the SEC’s fraud claims.
Within a few days, Judge Amon will decide whether the SEC’s case against Heart will continue as originally pleaded. The judge may grant or deny Heart’s motion to dismiss in full or in part.
Observers may watch the docket for her upcoming determination. A decision might take up to 90 days.