Richard Heart Declares Victory as SEC Drops Every Claim

The court previously dismissed the SEC’s complaint due to lack of jurisdiction, and the regulator now opted not to refile. Heart celebrated the decision as a win for open-source software and crypto rights. Meanwhile, the SEC and DOJ charged Ramil Palafox with running a $200 million Ponzi-like crypto scheme through PGI Global. In Australia, fintech firm Block Earner scored a legal victory after the Federal Court ruled its crypto yield product did not require a financial services license.

SEC Backs Off from Richard Heart

The US Securities and Exchange Commission (SEC) officially stated that it will not refile its securities fraud complaint against Richard Schueler, who is also known as Richard Heart. In an April 21 letter to Judge Carol Bagley Amon of the New York District Court, SEC attorney Matthew Gulde confirmed the regulator’s decision.

The court previously dismissed the SEC’s initial complaint on Feb. 28, due to a lack of jurisdiction. Judge Amon ruled that the SEC failed to show Heart’s actions were directed at US investors, which completely undermined the foundation of the case. Although the SEC was initially granted the option to amend its complaint, the agency now opted against pursuing any further legal action.

After the decision, Heart took to social media on April 22 to declare victory, and stated that Hex, PulseChain, and PulseX “defeated the SEC completely” and achieved a level of regulatory clarity that is rarely seen among cryptocurrencies. Heart explained that while the SEC voluntarily walked away from other cases, this was the only one where the regulator lost entirely in court. He also claimed the case was a broader win for open-source software, cryptocurrency, and free speech, as it involved the SEC targeting the software code itself.

The SEC originally filed the lawsuit in July of 2023, and it accused Heart of conducting unregistered securities offerings and raising over $1 billion through the promotion of HEX, PulseChain (PLS), and PulseX (PLSX). In response, Heart argued that the SEC lacked jurisdiction because he resides outside the United States. The SEC countered by pointing to his participation in a promotional event in Las Vegas.

Adding to the legal drama, Interpol issued a Red Notice seeking Heart’s arrest in Finland in December. Here, he was also reportedly under investigation for tax evasion. Despite these developments, Heart maintained his defense, and the eventual dismissal of the case is seen as a major landmark moment by his very loyal supporters.

(Source: Interpol)

Since reaching an all-time high of $0.031 in December 2024, the native PulseChain token HEX’s price dropped by almost 76%, mirroring the struggles of many altcoins that failed to keep pace with Bitcoin’s rally earlier  this year. 

The SEC’s decision to drop the case is part of the pattern under the Trump administration where several enforcement actions against crypto firms were either paused or abandoned entirely.

SEC and DOJ Charge Crypto Scam Mastermind

Other people in the crypto space are not as lucky as Richard Heart. The SEC and the Department of Justice filed coordinated civil and criminal charges against Ramil Palafox, a dual citizen of the US and the Philippines, accusing him of orchestrating a fraudulent crypto scheme that took in more than $200 million from approximately 90,000 investors. The SEC announced on April 22 that Palafox misappropriated more than $57 million from funds that were raised through his company, PGI Global, which operated between January 2020 and October 2021.

SEC statement

According to the SEC, Palafox used a multilevel marketing model to execute what it called a Ponzi-like scheme, promising guaranteed profits from AI-powered crypto and forex trading. The agency said Palafox hosted lavish events in locations like Dubai and Las Vegas to recruit new participants and incentivized referrals with bonuses. 

However, rather than using investor funds for actual trading, Palafox allegedly used the money to finance a luxury lifestyle. He bought cars, watches, homes, and other personal items. The SEC is seeking a permanent injunction against Palafox to bar him from future involvement in securities and crypto asset sales, along with repayment of ill-gotten gains and civil penalties.

The Department of Justice filed a parallel criminal case through the US Attorney’s Office for the Eastern District of Virginia. According to an indictment that was unsealed in March, Palafox faces charges including wire fraud, money laundering, and unlawful monetary transactions. 

Prosecutors allege that Palafox lured investors with false claims of consistent daily returns between 0.5% and 3% from Bitcoin trading. He also promised that profits would be made regardless of market direction. In reality, most of the funds were allegedly never used for trading, and many investors lost their money entirely. 

If he gets convicted, Palafox stands to forfeit over $1 million in cash and luxury assets including 17 high-end vehicles, as well as designer goods and jewelry.

PGI Global was linked to several other companies, including the Praetorian Group International Trading Inc., whose website was seized by the Department of Justice in 2021. The UK’s High Court later shut down the firm’s UK operations. 

This case is the SEC’s first major crypto enforcement under its new chair, Paul Atkins, who was sworn in on April 22. 

Block Earner Beats ASIC in Crypto Court Battle

In other crypto-related legal news, the Federal Court of Australia ruled in favor of fintech company Block Earner, overturning a previous decision that found the firm needed a financial services license for its discontinued crypto-linked fixed-yield earning products. In a judgment that was issued on April 22, Justices David O’Callaghan, Wendy Abraham, and Catherine Button stated that Block Earner’s yield product does not qualify as a financial product, managed investment scheme, or derivative under the Corporations Act. 

The court determined that the product functioned as a straightforward loan agreement, with users lending crypto assets under fixed terms in exchange for interest payments. Because there was no pooling of funds or shared investment upside, it could not be classified under existing financial product definitions.

The ruling is a setback for the Australian Securities and Investment Commission (ASIC), which initially brought the case in November of 2022, and argued that Block Earner required an Australian Financial Services License to offer its crypto yield products. ASIC has been ordered to cover the costs of the proceedings, including appeals, and stated in a press release that it is reviewing the decision.

(Source: ASIC)

Block Earner’s Chief Commercial Officer, James Coombes, said the court’s decision provides much-needed legal clarity, confirming that crypto assets should not be treated differently from traditional asset classes when applying existing financial laws. He explained that the product was designed to offer fixed returns without exposing customers to pooled investments or the broader risks of the company’s operations. 

Despite the favorable ruling, Block Earner does not plan to relaunch its Earner product, which was discontinued when legal action began. However, the firm will continue to focus on crypto-backed lending products as its core business offering.