Crypto Crackdown Continues: SEC Charges HEX Founder Richard Heart For Over $1 Billion Unregistered Securities

The U.S. Securities and Exchange Commission (SEC) has taken legal action against Richard Heart, also known as Richard Schueler, and three entities under his control – HEX, PulseChain, and PulseX – for allegedly conducting unregistered offerings of crypto asset securities that amassed over $1 billion in crypto assets from investors.

In addition to the unregistered offerings, Heart and PulseChain are also charged with fraud for misappropriating at least $12 million of investors’ funds for the purchase of luxury goods, including sports cars, watches, and a massive 555-carat black diamond known as ‘The Enigma,’ reputedly the world’s largest black diamond.

The SEC’s complaint reveals that Richard Heart began marketing HEX in 2018, touting it as the first high-yield “blockchain certificate of deposit,” enticing investors with promises of immense wealth. Between December 2019 and November 2020, Heart and HEX allegedly conducted an unregistered offering, raising more than 2.3 million Ethereum (ETH).

The SEC also claims that Heart employed “recycling” transactions to discreetly acquire more Hex tokens. Furthermore, the complaint accuses Heart of orchestrating two additional unregistered crypto asset security offerings between July 2021 and March 2022, each generating hundreds of millions of dollars in crypto assets. These funds were purportedly meant to support the development of the supposed crypto asset network, PulseChain, and the claimed crypto asset trading platform, PulseX, by offering their native tokens PLS and PLSX, respectively.

In a bid to evade securities laws, Heart allegedly designed and marketed a “staking” feature for HEX tokens, promising returns as high as 38%. The SEC contends that Heart encouraged investors to “sacrifice” their crypto assets instead of “investing” in exchange for PLS and PLSX tokens.

The Heart of the fraud

Attorney Jason Seibert recently addressed concerns about Heart’s cryptocurrency offering during a Twitter Space discussion. Seibert emphasized that he had previously highlighted the questionable nature of Heart’s claims about HEX not being a securities offering on Tone Vays’ 2019 Bitcoin Law Review. Heart had described HEX as a certificate of deposit but denied it being classified as a security.

“When we asked him point-blank who was behind the Origin Address, he said he wasn’t going to say and would never say, because he did not want to run afoul of the SEC’s Howey Test. To me, that was prima facie evidence of an unregistered offering on nearly day one. He basically admitted to violations on day one,” Seibert recalled.

In response to an audience member’s question about potential criminal charges against Heart, Seibert explained that the Department of Justice was content to allow the SEC to conduct their investigation and build a case on the civil side first. This approach might create grounds for a possible arrest warrant in the future and could lead to felony charges against Heart.

Heart is also known for personally funding a documentary movie called “The Highest of Stakes,” scheduled to premiere in Miami this week.

In another Twitter Space discussion, Eric Wall, who was once friends with Heart but turned into a critic, expressed his views on HEX’s limited presence on major crypto exchanges. Wall revealed that the reason for this lack of listings was that Heart owned a significant portion of the HEX supply.

““That made it so that Hex was basically only listed on Uniswap. Hex was a ‘pioneer’ of DeFi because Richard had no other choice. So, it’s not insane to me that Richard was able to spin up this cult,” Wall said.

Wall added that these tactics of Heart’s included making sacrifices, flaunting extravagant jewelry, portraying himself as a self-made millionaire, and consistently attributing the source of his wealth to external factors. Wall believed that Heart’s personality and charisma made him well-suited for cultivating a devoted following, akin to that of a cult.

Commenting on the case, Eric Werner, Director of the Fort Worth Regional Office, stated, “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. This action seeks to protect the investing public and hold Heart accountable for his actions.”

The SEC’s complaint has been filed in the U.S. District Court for the Eastern District of New York, alleging that Richard Heart, Hex, PulseChain, and PulseX violated the registration provisions of Section 5 of the Securities Act of 1933. Additionally, the complaint accuses Heart and PulseChain of violating the antifraud provisions of the federal securities laws. The SEC seeks injunctive relief, disgorgement of ill-gotten gains, plus prejudgment interest, penalties, and other equitable relief.


Information for this briefing was found via Protos and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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