US SEC Accused HEX Founder for Offering Unregistered Securities

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Key takeaways:

  • Richard Schueler is being sued by the SEC for allegedly offering three tokens without first registering them.
  • By reportedly stealing at least “$12.1 million of PulseChain” in investor cash, Heart and PulseChain defrauded investors.

For the suspected unregistered sale of three coins, the United States Securities and Exchange (SEC) has launched a complaint against Richard Schueler, also known as Richard Heart, in the cryptocurrency community. 

The SEC asserted that Heart raised more than $1 billion by means of an unregistered offering and sale of digital asset securities, such as HEX, PulseChain (PLS), and PulseX (PSLX), in a document submitted on July 31 to the US District Court for the Eastern District of New York.

The complaint claims that Heart hired developers to maintain the infrastructure supporting the crypto assets while promoting the tokens as a pathway to grandiose wealth for investors. The complaint added:

“Heart continually touted these investments as a pathway to grandiose wealth for investors, claiming that Hex, for example, ‘was built to be the highest appreciating asset that has ever existed in the history of man,”

Heart is accused by the SEC of breaking federal securities laws and defrauding small investors both domestically and internationally. The HEX founder was charged with soliciting hundreds of millions of dollars in deposits from investors while promising them high profits.

Heart and PulseChain allegedly scammed investors by “misappropriating at least $12.1 million of PulseChain investor funds,” which were then used by Heart to purchase pricey items like a 555-carat diamond, luxury vehicles, and timepieces. 

The complaint lists additional purchases made by Heart using the allegedly mingled money, including several Rolex watches, a Ferrari, and a McLaren. The complaint stated: 

“Heart and PulseChain defrauded investors by misappropriating at least $12.1 million of PulseChain investor funds,”

The Hex staking program, which Heart claimed would help token holders, is also a target of the case. The website asserts that staging “puts upward pressure” on Hex’s price since it reduces the supply, despite neither the Hex tokens nor the sale having been registered with the SEC. In the SEC’s announcement about the lawsuit, Eric Werner, Director of the Fort Worth Regional Office, said: 

“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”

The Coinbase and Binance staking programs have previously been the focus of the SEC.

The US SEC has also established new rules for cybersecurity incidents affecting US public companies.

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