Hex, Pulsechain Prices Dump as US SEC Accuses Its Creator Richard Heart of Defrauding Investors
Richard Heart and his crypto entities Hex, PulseChain, and PulseX face a billion-dollar lawsuit from the US SEC over allegations of unregistered securities sales and fraud.
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Richard Schueler, also known as Richard Heart, and his three entities, Hex, PulseChain, and PulseX. The complaint alleges that Heart raised over $1 billion through the unregistered offer and sale of crypto asset securities to retail investors in the U.S. and abroad.
Heart, an American-born internet marketer and entrepreneur residing in Finland, is accused of conducting three separate offerings: Hex, PulseChain, and PulseX. Each of these offerings is considered a crypto asset security. Heart is alleged to have used millions of dollars of PulseChain investor funds for personal luxury purchases.
Exploring the Three Controversial Offerings: Hex, PulseChain, PulseX
Hex
The first offering, Hex, was marketed as the first high-yield “Blockchain Certificate of Deposit” launched on the Ethereum network.
- Heart promised investors incentives and bonuses, and a feature called “staking” that allowed Hex investors to lock up their Hex tokens for a designated period of time in return for additional Hex tokens.
- Heart claimed that investors who participated in the so-called “staking” of Hex tokens could earn an average of 38% annual return in the form of additional Hex tokens.
PulseChain and PulseX
Between July 2021 and April 2022, Heart conducted additional unregistered offerings of investments he developed called PulseChain (offering “PLS” tokens) and PulseX (offering “PLSX” tokens).
For both the PulseChain and PulseX offerings, Heart urged investors to invest by depositing their crypto assets to the PulseChain and PulseX public wallet addresses in exchange for a promise to deliver PLS and PLSX tokens in the future.
Allegations of Misappropriation of Investor Funds
The SEC alleges that Heart and PulseChain defrauded investors by misappropriating at least $12.1 million of PulseChain investor funds.
- Instead of using these investor funds to develop and market the PulseChain network, Heart and PulseChain allegedly used at least $12.1 million of investor funds for Heart’s personal luxury purchases, including a 555-carat diamond, expensive watches, and high-end automobiles.
SEC’s Demands
The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains, plus prejudgment interest, and civil penalties against Heart and his entities.
The lawsuit alleges that all defendants violated the securities-registration provisions of the federal securities laws, and Heart and PulseChain violated the antifraud provisions of the federal securities laws.
Background of Richard Heart and His Crypto Entities
Richard Heart, 43, is a U.S. citizen currently residing in Helsinki, Finland.
- He is the founder of Hex, PulseChain, and PulseX. Hex is an ERC-20 token and an unincorporated entity established by Heart. PulseChain purports to be an Ethereum fork and layer-1 blockchain that Heart released on May 12, 2023.
- PulseX is a self-described decentralized protocol on the Ethereum blockchain that Heart developed to serve as PulseChain’s so-called decentralized crypto asset trading platform through a fork of the Uniswap platform.
The lawsuit has had a significant impact on the price of HEX, a popular cryptocurrency, which took a dive following the news.
This is a developing story.
Sources: Coindesk, Blockworks, U Today
This article is published on BitPinas: US SEC Charges Hex and PulseChain Creator Richard Heart of Securities Fraud
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