Crypto Case Tests SEC’s Ability to Police Blockchain Technology
For some time now, the SEC has been self-appointed as the “global governor of blockchain technology”. As financial regulators have set their sights on DeFi, the SEC has ramped up its activities and tested the boundaries of law enforcement’s capability to police crypto transactions. In an attempt to punish the behavior of Richard Heart, founder of the Hex crypto token, who was accused of illegally using investor funds to buy luxury goods, the SEC has taken legal action against Heart through a combined lawsuit that includes Hex, Heart, a blockchain protocol, the PulseChain blockchain network, and PulseX, a decentralized finance platform.
PulseChain responded by stating that the SEC’s actions are “novel and unsupported, suing a computer software is ‘bizarre’”. The SEC believes that Hex and the other software are “unincorporated alter-ego entities” of Heart and alleges Hex as both a security and an entity, something that Heart and other crypto users have disputed. While the true reason for the SEC calling forth the token and network as defendants is unknown, users fear that the SEC is trying to shut down PulseChain and Hex. The potential ramifications of the SEC’s action could lead to developers being held liable for the computer software that they write.
