SEC adds another unregistered securities complaint to its list of lawsuits.
A legal proceeding has been instigated against Richard Schueler, widely known as Richard Heart in cryptocurrency circles, by the US Securities and Exchange Commission (SEC).
On July 31st, the SEC filed a complaint against Heart in the US District Court for the Eastern District of New York. The document alleges that Heart accrued over $1 billion via “the unregistered offer and sale of crypto asset securities,” which includes Hex, PulseChain (PLS), and PulseX (PSLX) tokens.
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The SEC contends that Heart marketed these tokens as a wealth-building tool for investors and hired developers to manage the crypto technical framework.
The SEC's complaint focuses on Heart's violation of federal securities laws and his alleged duping of retail investors both within and outside the US.
The charges particularly underscore the Hex founder's promises of substantial returns to investors, luring them to deposit hundreds of millions of dollars. As stated in the lawsuit, Heart reportedly took in more than 2.3 million Ether (ETH), worth approximately $678 million, in exchange for Hex tokens. He also allegedly accepted $354 million and $676 million for promising future deliveries of PLS and PLSX tokens, respectively.
According to the court filing:
Heart and PulseChain defrauded investors by misappropriating at least $12.1 million of PulseChain investor funds.
The SEC alleges that the funds raised for PulseChain development and marketing, or allegedly to support Heart's claim of fostering "freedom of speech," were instead used for Heart's personal luxuries, including a 555-carat diamond, high-end timepieces, and premium vehicles.
The SEC's complaint seeks injunctive relief, prejudgment interest, disgorgement, and civil penalties against Heart and his projects.
This recent legal action from the SEC adds to the string of civil actions seen as part of its “regulation by enforcement” strategy towards cryptocurrencies in the US. It has ongoing lawsuits against crypto exchanges Coinbase and Binance, among others, for similar allegations related to unregistered securities offerings.
As cryptocurrency continues to gain traction globally, regulatory bodies like the SEC are stepping up efforts to ensure the legality and security of these digital asset offerings.
