Finnish authorities also placed Richard Heart on Europe’s most wanted list. In a separate case, influencer Haliey Welch is cooperating with legal representatives after allegations of a pump-and-dump scheme involving the Hawk Tuah token. Meanwhile, financial educator Scott Pape exposed crypto scams impersonating him. Additionally, the SEC fined Jump Trading’s Tai Mo Shan $123 million for deceptive practices related to stabilizing TerraUSD (UST) during its 2021 depeg event.
Interpol Issues Red Notice for Hex Founder
Interpol issued a Red Notice for Richard Schueler, better known as Richard Heart, who is the founder of Hex. The notice was issued for alleged tax fraud and assault. This Red Notice is a global request for law enforcement to locate and provisionally arrest an individual, and was prompted by Finnish authorities.
However, it does not constitute an international arrest warrant. Schueler has also been placed on Europe’s most wanted fugitives list, accusing him of assaulting a 16-year-old by grabbing their hair, dragging them into a stairwell, and knocking them to the ground.
Richard Schueler’s Red Notice (Source: Interpol)
The remand order for Schueler was issued three months ago, on Sept. 13, with Finnish authorities suspecting him of tax evasion from June of 2020 to April of 2024. The allegations include discrepancies in Schueler’s reported income compared to estimates from tax authorities.
On Sept. 18, a Helsinki police detective, Harri Saaristola, told Finnish broadcaster Yle that Heart’s financial disclosures did not align with the tax service’s calculations. Schueler has not publicly addressed the Red Notice just yet, but is still active on social media. In a Dec. 21 post, he commented, “If the haters really wanted to get me down, they could raise more than the $27M I did for medical research.”
Schueler is also embroiled in a legal battle with the U.S. Securities and Exchange Commission (SEC) over allegations of unregistered offerings of three cryptocurrency tokens: Hex, PulseChain (PLS), and PulseX (PSLX). The SEC accused Schueler of raising more than $1 billion through these unregistered sales, and claimed he marketed them as a way to achieve wealth. Schueler tried to dismiss the $1 billion lawsuit in August, but the SEC maintained its authority to pursue the case.
Haliey Welch Addresses Hawk Tuah Token Scandal
Richard Heart is not the only crypto founder currently facing some serious legal troubles. Haliey Welch, the influencer behind the viral “Hawk Tuah” video, addressed the controversy surrounding a meme coin bearing her nickname that experienced a dramatic pump and dump shortly after its launch in December.
In a Dec. 20 post on X, Welch stated that she is “fully cooperating” with lawyers representing investors in the Hawk Tuah (HAWK) token. While Welch was not named as a defendant yet, crypto users have filed a lawsuit against the project’s creators and partners, accusing them of promoting and selling an unregistered securities offering.
The HAWK token was launched on Dec. 4, and reached a market capitalization of about $500 million before crashing by 90%. This prompted allegations of a rug pull. Welch shared that she is very serious about the matter and encouraged the affected people to contact legal representatives.
The controversy stems from her promotion of the token, which used her likeness and branding, as she transitioned from her TikTok fame into the cryptocurrency space. Welch initially gained internet fame in June after a viral clip earned her the nickname “Hawk Tuah” girl.
Blockchain data revealed suspicious activity surrounding the token’s launch as one wallet acquired roughly 18% of the HAWK supply and sold it for a profit of over $1 million shortly afterward. Meanwhile, many investors suffered big losses during the token’s rapid decline. It is still uncertain whether Welch or the project’s founders could face criminal or regulatory actions in the United States. The SEC, under Chair Gary Gensler, has taken a very firm stance when it comes to treating most tokens as securities, though the agency’s leadership is expected to shift to Republican control in January.
Barefoot Investor Exposes Crypto Scam Tactics
Scott Pape, who is known as the “Barefoot Investor,” recently exposed how he tackled crypto scammers who used his identity to defraud his followers. Pape is an Australian financial educator, and shared that he and his team reported hundreds of fake Facebook groups impersonating him to scam people. Frustrated by the slow response from Facebook, Pape decided to engage directly with the fraudsters and investigate their methods.
By using a fake name, Pape contacted a fraudulent Facebook page and was invited to join an exclusive WhatsApp group called the “DB Wealth Institute.” A quick search of the group revealed automated press releases about the supposed institute, bragging about its achievements and partnerships with well known platforms. Pape also discovered that U.S. regulators previously warned of similar fake “wealth institutes” that operated through WhatsApp and offered fraudulent crypto trading lessons.
The scam followed a familiar pattern: members of the group were provided fake trading signals, encouraged to share fabricated successes, and pressured into making large investments. Bots likely generated the constant flow of messages claiming profitable trades.
Pape was guided by an assistant named “Ally,” and even followed one of these signals and saw an 81% profit on a trade, which is a tactic to build confidence and greed. Soon after, he was pressured to invest larger sums, with exclusive programs starting at $20,000 and going up to $5 million.
Part of the scam’s strategy is to instil fear and desperation in victims to extract even more money from them. He pointed out that scammers often target victims again after the initial scam by urging them to borrow money in an attempt to recover losses.
Pape is the author of the best-selling book The Barefoot Investor, and has been very vocal about fighting financial fraud. According to Chainalysis, crypto scams and hacks in 2024 stole $2.2 billion, a 21% increase from 2023.
SEC Fines Tai Mo Shan $123M
In May of 2021, after a temporary depegging of the algorithmic TerraUSD stablecoin (UST), the token appeared to stabilize back to its $1 peg automatically. However, according to an SEC complaint, a subsidiary of Jump Trading’s crypto unit, Tai Mo Shan, intervened with $20 million in purchases to stabilize the token. This action allegedly misled investors in UST and its counterpart token, Luna, by giving the impression that Terraform Labs’ stabilization mechanism functioned as intended.
The SEC and Tai Mo Shan reached a settlement which requires the firm to pay $123 million in fines, including over $86 million in disgorgement and $36 million as a civil penalty. The disgorgement amount was based on profits Tai Mo Shan allegedly earned by purchasing UST during the depeg event and subsequently receiving and selling unlocked luna tokens.
These actions, according to the SEC, deceived investors about the efficacy of Terraform Labs’ arbitrage mechanism. Earlier SEC allegations also suggested that Tai Mo Shan profited $1.28 billion from these transactions, but the settlement was reached without the firm admitting or denying the findings.
Terraform Labs founder Do Kwon publicly claimed that TerraUSD survived a severe stress test, and used the situation as proof of the algorithmic mechanism’s robustness. However, the SEC pointed out that the lack of transparency about Tai Mo Shan’s involvement misled the market about UST’s stability. Jump Crypto’s president, Kanav Kariya, invoked his Fifth Amendment rights during a previous deposition about the deal.
As part of the settlement, Tai Mo Shan agreed to pay the penalty without admitting any wrongdoing. Overall, the SEC holds firm that the intervention misrepresented UST’s stability and Terraform Labs’ system. Terraform Labs also agreed to pay over $4 billion in fines after the collapse of its ecosystem and received permission to start winding down operations under U.S. bankruptcy proceedings earlier this year.
