The U.S. Securities and Exchange Commission (SEC) has taken legal action against well-known crypto influencer Richard Heart, also known as Richard Schueler, by filing a fraud lawsuit on Monday.
The SEC alleges that Heart raised over $1 billion through the unregistered offer and sale of crypto asset securities related to Hex, PulseChain, and PulseX.
According to the lawsuit, the SEC considers Hex, PulseChain, and PulseX as securities. Heart extensively promoted these investments, touting them as a means to extraordinary wealth, with Hex being referred to as the “highest appreciating asset that has ever existed in the history of man.”
The complaint further accuses Heart and PulseChain of defrauding investors by misappropriating at least $12.1 million of PulseChain investor funds.
These funds were allegedly used by Heart to indulge in lavish purchases, including a 555-carat diamond, luxury cars, and high-end watches.
Heart is accused of concealing the transfer of $217 million in investor assets to a private wallet, utilizing a “decentralized aggregator” and the Mixer to hide the misappropriation for personal use.
The lawsuit lists extravagant acquisitions made by Heart, including Ferraris, McLarens, and multiple Rolex watches.
The SEC’s lawsuit also targets the Hex staking program, which Heart promoted as beneficial to token holders. Despite failing to register Hex tokens or the offering with the SEC, the website claimed that staking contributed to driving Hex’s price upward by reducing supply.
The SEC had previously targeted staking programs offered by prominent crypto exchanges Coinbase and Binance.
Eric Werner, the Director of the Fort Worth Regional Office, emphasized in the SEC’s statement on the suit that Heart encouraged investors to buy crypto asset securities through unregistered offerings and later defrauded them by using their assets for extravagant luxury purchases.
Court documents have charged Heart with fraud in connection with the sale of a security, fraud in offering the sale of a security, and securities registration violations.