At the commencement of the afternoon on July 31, 2023, the U.S. Securities and Exchange Commission (SEC) instituted legal proceedings against Richard Heart (pseudonymously known as Richard Schueler), along with three unincorporated organizations under his control: Hex, PulseChain, and PulseX. The accusations pertain to the execution of unauthorized solicitations of cryptographic asset securities, which have accumulated upwards of $1 billion in cryptographic assets from contributing parties.
Additionally, the SEC brought forth charges against Heart and PulseChain on grounds of fraudulent conduct, relating to the illicit appropriation of a minimum of $12 million from the proceeds of the offering. This misappropriated sum was reportedly used to acquire high-end goods, including sports automobiles, luxury timepieces, and a 555-carat black gemstone identified as ‘The Enigma,’ which is purportedly the largest black diamond in the world.
The SEC says that Heart did something called “recycling” transactions. This let him secretly get more Hex tokens. Heart and his buddies made it look like a lot of people were trading and wanted Hex by using their own money. The SEC thinks almost 97% of the money invested was just Heart and his friends’ own cash.
Based on what the SEC has complained, Heart started to advertise Hex in 2018, saying it was the first high-interest “blockchain certificate of deposit.” He also started to hype up Hex tokens as a way to make people “wealthy.” From at least December 2019 to November 2020, it’s said that Heart and Hex sold Hex tokens without registering the offering, getting over 2.3 million Ethereum (ETH). This includes what are known as “recycling” transactions that let Heart secretly get more Hex tokens.
The indictment additionally posits that, within the period extending from at least July 2021 to March 2022, Heart masterminded two more unauthorized cryptographic asset security offerings that separately amassed several hundreds of millions of dollars in cryptographic assets. As asserted, these funds were slated to bolster the development of a purported cryptographic asset network, PulseChain, and an alleged cryptographic asset trading platform, PulseX, via the offerings of their indigenous tokens, respectively, PLS and PLSX. Heart is also accused of crafting and marketing a so-called “staking” feature for Hex tokens, which he purported would yield returns up to 38 percent. Moreover, the indictment alleges Heart endeavored to circumvent securities legislation by prompting investors to “sacrifice” (rather than “invest”) their cryptographic assets in exchange for PLS and PLSX tokens.
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Last Updated on 07/31/2023 by Emmanuel Motelin
