The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Richard Heart and his cryptocurrency projects, including Hex, PulseChain and PulseX.
Heart, also known as Richard Schueler, raised more than $1 billion through the sale of unregistered securities, the SEC claims. Heart allegedly used at least $12 million of the funds raised to purchase luxury items, including high-end cars, watches, and a 555-carat black diamond known as “The Enigma.”
“Heart called on investors to buy crypto asset securities in offerings that he failed to register. He then defrauded those investors by spending some of their crypto assets on exorbitant luxury goods,” said Eric Werner, the director of the SEC’s Fort Worth office.
Heart is a prominent figure in the crypto industry and a YouTube streamer. He started marketing Hex in 2018 and touted it as the first high-yield “blockchain certificate of deposit.”
“This action seeks to protect the investing public and hold Heart accountable.” said Eric Werner, the director of the SEC’s Fort Worth office.
The SEC alleges that Heart carried out three separate offerings of “crypto asset securities,” one each for Hex, PulseChain, a layer-1 fork of Ethereum, and PulseX, a DeFi protocol.
As reported on the Techcrunch website, PulseChain launched in May, and PulseX is the exchange on its blockchain that allows users to exchange other tokens on its network, according to its website.
The two entities were off to a rocky start due to their connection to Hex and some community members’ concerns about its fundamentals. Hex has been around since 2019 and doesn’t have a stellar reputation because many market players view it as a scam due to its advertisements as the first “blockchain certificate of deposit.” It claimed that users who stake its token could mine new coins with high APYs and deposits are worth “trillions of dollars” and are “worth more than gold, credit card companies and cash.”
The SEC echoed that Heart allegedly created the “staking” feature for HEX tokens, which he claimed would provide yields as high as 38%. The complaint further alleges that Heart “attempted to evade securities laws by calling on investors to ‘sacrifice’ (instead of ‘invest’) their crypto assets in exchange for PLS and PLSX tokens.”
This lawsuit against Heart and his projects is the latest in a series of legal actions by the SEC against major firms and figures in the crypto industry.
The SEC has previously filed lawsuits against Gemini, Genesis, Bittrex, TRON (CRYPTO: TRX), Coinbase (NASDAQ: COIN), and Binance (CRYPTO: BNB).
Produced in association with Benzinga
Edited by Eunice Anyango Oyule and Judy J. Rotich