SEC says Hex crypto founder defrauded investors and bought $4m diamond

SEC says Hex crypto founder defrauded investors and bought $4m diamond

The Securities and Exchange Commission has charged entrepreneur Richard Heart with conducting unregistered offerings of crypto asset securities that raised more than $1 billion and of defrauding investors of $12 million to buy, among other things, a 555-carat black diamond.

In a complaint filed in Brooklyn federal court, the watchdog charged Hart (aka Richard Schueler) and three unincorporated entities that he controls - Hex, PulseChain, and PulseX - with conducting the unregistered offerings.

According to the complaint, Heart began marketing Hex in 2018, claiming it was the first high-yield “blockchain certificate of deposit,” and began promoting tokens as an investment designed to make people “rich.”

Heart and Hex allegedly offered and sold Hex tokens in an unregistered offering, collecting more than 2.3 million Ethereum, including through so-called “recycling” transactions that enabled Heart to surreptitiously gain control of more Hex tokens.

Then, alleges the SEC, between 2021 and 2022 Heart orchestrated two additional unregistered crypto asset security offerings that each raised hundreds of millions of dollars more in crypto assets.

The SEC also charges Heart and PulseChain with fraud for misappropriating at least $12 million of offering proceeds to purchase luxury goods including sports cars, watches, and ‘The Enigma’ - reportedly the largest black diamond in the world, for which he paid over $4 million at auction.

“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,” says the SEC's Eric Werner.

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