SEC Sues Richard Heart on $1 Billion Unregistered Securities and Crypto Fraud Allegations

The SEC goes after a crypto personality Richard Heart for allegedly raising over $1 billion through the sale of crypto tokens and misappropriating at least $12 million of investor funds.

Cryptocurrency fraud

On Monday, the U.S. Securities and Exchange Commission (SEC) brought charges against Richard Schueler, an internet crypto marketer better known as Richard Heart. The agency alleges that Heart raised over $1 billion in crypto assets from investors through "three unincorporated entities that he controls, Hex, PulseChain, and PulseX." Additionally, the SEC charged Heart with defrauding at least $12 million of offering proceeds.

The crypto personality allegedly used the money to indulge in luxury goods, including sports cars and watches. None of it, though, beats the spending in the precious stones category. According to the release, Heart treated himself to a 555-carat black diamond known as "The Enigma," reportedly the largest black diamond in the world.

The SEC's complaint details how Heart started touting Hex in 2018 as the first high-yield "blockchain certificate of deposit," enticing investors with promises of becoming "rich" and getting on the "pathway to grandiose wealth." In about a year, the offering brought in over 2.3 million Ethereum (ETH).

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The SEC claims that Schueler secretly gained control of additional Hex tokens through so-called "recycling" transactions. Furthermore, between July 2021 and March 2022, Schueler allegedly conducted two more unregistered crypto asset security offerings, raising hundreds of millions of dollars more in crypto assets for the development of PulseChain and PulseX networks.

PulseChain and PulseX were to be supported by their native tokens, PLS and PLSX, respectively. Schueler promoted a "staking" feature for Hex tokens, boasting returns of up to 38%. However, the SEC asserts that Schueler attempted to evade securities laws by encouraging investors to "sacrifice" their crypto assets in exchange for PLS and PLSX tokens instead of properly registering the offerings.

All in all, the SEC filed three securities fraud charges against Heart in the Eastern District of New York. The Hex creator, an American citizen residing in Finland, has recently deactivated his Instagram profile to – as he phrased it – display humility and respectfulness.

Following the SEC's announcement, the HEX price took a nosedive.

Hex token