FOR IMMEDIATE RELEASE March 4th, 2025
Clear Court Ruling Comes as Other Cryptocurrency Enforcement Matters Dismissed Without Resolution
New York - In a significant victory against regulatory overreach, Judge Carol Ann Bagley of the Eastern District of New York has dismissed all of the SEC's claims against several blockchain software programs. Notably, the Court rejected the SEC's unprecedented attempt to name software itself—specifically Hex, PulseChain, and PulseX—as defendants in the litigation. While many recent cryptocurrency enforcement matters have been dismissed without judicial resolution, this clear court ruling will serve as a valuable legal hurdle for the industry. Judicial decisions like this create certainty that regulatory discretion alone cannot provide.
Of course, the victory was directly attributable to the combined efforts of the defense counsel team for the primary, individual defendant Richard Schueler. The Investor Choice Advocates Network (ICAN), which represented the PulseChain Foundation as amicus curiae, played a crucial role in challenging the SEC's dangerous legal strategy. ICAN's amicus brief specifically addressed the SEC's novel and legally unsupported theory that software programs could be sued as "unincorporated alter ego entities"—an approach that threatened to create dangerous precedent for the entire technology sector.
"You can't sue the sidewalk, or a piece of software," ICAN argued in its brief, highlighting the absurdity and legal impossibility of the SEC's approach. The brief detailed how the SEC's attempt to treat inanimate technological tools as legal defendants violated basic principles of civil procedure and threatened to chill legitimate expressive activities by users of these blockchain platforms.
The Court's dismissal represents a rejection of the SEC's aggressive expansion of its enforcement authority, which, had it succeeded, could have established a troubling precedent allowing regulators to target software rather than focusing on the actions of individuals or entities.
This case also demonstrates the SEC's problematic pattern of excluding from participating in litigation the very stakeholders the SEC claims to protect. Despite representing thousands of PulseChain community members of the PulseChain Foundation, ICAN was limited to amicus status rather than full intervention—a restriction the SEC routinely seeks to impose on affected communities in cryptocurrency and other enforcement actions.
ICAN was pleased to contribute to the dismissal of the software defendants by filing an amicus brief on behalf of the PulseChain Foundation with a specific focus on the novel software-as-defendant issue. While Judge Bagley has afforded the SEC 20 days to amend its complaint, this dismissal sends a clear message about the limits of the SEC's enforcement approach in the cryptocurrency space and elsewhere.
For more information about ICAN's work, visit www.icanlaw.org or contact: info@icanlaw.org
About ICAN: The Investor Choice Advocates Network (ICAN) is a nonprofit organization dedicated to breaking down barriers to entry to capital markets and pushing back against regulatory overreach. ICAN advocates for fair and transparent regulatory practices, ensuring all individuals have equal access to investment opportunities and due process in the financial markets.
Contact Information: Investor Choice Advocates Network (ICAN) Email: info@icanlaw.org Website: www.icanlaw.org
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