The United States Securities and Exchange (SEC) has filed a lawsuit against Richard Schueler, better known in the crypto space as Richard Heart, for alleged unregistered offerings of three tokens.
In a July 31 filing in U.S. District Court for the Eastern District of New York, the SEC claimed Heart had raised more than $1 billion through “the unregistered offer and sale of crypto asset securities”, which included HEX, PulseChain (PLS), and PulseX (PSLX). According to the complaint, Heart touted the tokens “as a pathway to grandiose wealth for investors”, hiring developers to maintain the framework behind the crypto assets.
The SEC alleged Heart violated federal securities laws and defrauded retail investors both in the U.S. and abroad. Many of the allegations focused on the HEX founder promising large returns for investors in exchange for hundreds of millions of dollars in deposits. For example, he allegedly accepted more than 2.3 million Ether (ETH) — worth roughly $678 million at the time — in exchange for HEX tokens, $354 million in exchange for the promise of future delivery of PLS tokens, and $676 million in exchange for the promise of future delivery of PLSX tokens.
“Heart and PulseChain defrauded investors by misappropriating at least $12.1 million of PulseChain investor funds,” said the complaint. “Instead of using these investor funds to develop and market the PulseChain network, or even to fulfill Heart’s explicit statement that invested funds supported ‘freedom of speech’ Heart and PulseChain 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.”
This is a developing story, and further information will be added as it becomes available.