The Securities and Exchange Commission (SEC) has brought charges against Richard Heart, the founder of the crypto project Hex, along with three associated entities, for allegedly conducting unregistered crypto assets securities offerings.
These offerings raised more than $1 billion in funds from investors, according to a July 31st press release.
Richard Heart Promised Riches But Misused Investor Funds
Richard Heart, also known as Richard J. Schueler, is a crypto influencer who operates a YouTube channel promoting his crypto products, including the Hex token and PulseChain. Heart raised substantial amounts through these offerings, which the SEC has now deemed as unregistered securities.
The SEC alleges that Richard Heart marketed Hex in 2018, claiming it to be the first high-yield “blockchain certificate of deposit” and presenting Hex tokens as a lucrative investment opportunity. As noted by the regulator,
”From at least December 2019 through November 2020, Heart and Hex allegedly offered and sold Hex tokens in an unregistered offering, collecting more than 2.3 million Ethereum (ETH), including through so-called ‘recycling’ transactions that enabled Heart to surreptitiously gain control of more Hex tokens.”
The complaint further accuses Heart of attempting to evade securities laws by encouraging investors to “sacrifice” their crypto assets instead of investing them.
In addition to the unregistered offerings, the regulatory agency highlights that Heart and his project PulseChain misused a significant portion of the funds, spending over $12 million on luxury goods.
Notable purchases include a 555-carat black diamond called “The Enigma,” high-end sports cars, and expensive watches.
The filing points out that Hex, PulseCoin, and PulseX, the crypto assets involved in the unregistered offerings, have faced significant price depreciation.
As a result, the SEC is now demanding a jury trial and seeking to ban Heart and his projects from selling crypto asset securities. They also aim to recover the gains, secure prejudgment interest, and impose civil penalties.
This new case adds to a series of lawsuits the U.S. Securities and Exchange Commission (SEC) has recently filed against various crypto projects and influencers. However, Richard Heart’s case stands out due to the significant amount of money allegedly spent on luxury items using investor funds.