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HEX Price Plunges as SEC Sues Richard Heart for Securities Fraud

Mon, 07/31/2023 - 14:51
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Alex Dovbnya
Hexicans take major blow as Securities and Exchange Commission (SEC) charged its founder, Richard Heart, with securities fraud
HEX Price Plunges as SEC Sues Richard Heart for Securities Fraud
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The price of HEX, a popular cryptocurrency, took a dive as Richard Heart, also known as Richard J. Schueler, was charged with securities fraud by the Securities and Exchange Commission (SEC).

The complaint alleges that Heart, a controversial entrepreneur now residing in Finland, raised over $1 billion through the unregistered offer and sale of crypto asset securities to retail investors globally.

This figure encompasses three separate entities, namely Hex, PulseChain and PulseX, all of which the SEC identifies as crypto asset securities. The charges allege that Heart not only violated federal securities laws through the unregistered offer and sale of these securities, but also defrauded investors through misappropriation of assets.

Hex, the first of the three alleged fraudulent securities, was marketed by Heart as the first high-yield "Blockchain Certificate of Deposit" launched on the Ethereum network.

According to the SEC complaint, Heart accepted more than 2.3 million Ether (ETH), valued at over $678 million, in exchange for issuing Hex tokens. The majority of these ETH deposits, however, are suspected of being "recycling" transactions orchestrated by Heart or other insiders, which created a false impression of high trading volume and organic demand.

Further allegations center on Heart's additional offerings, PulseChain and PulseX. Heart persuaded investors to deposit their crypto assets onto the PulseChain and PulseX public wallets in exchange for the future delivery of PLS and PLSX tokens, respectively.

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These offerings attracted more than $1 billion, with PulseChain investments totaling over $354 million and PulseX more than $676 million. Heart, who has demonstrated familiarity with U.S. securities laws, allegedly made veiled references about why investors could expect profits while also making tongue-in-cheek disavowals.

Perhaps the most damning part of the SEC's complaint revolves around Heart's alleged misappropriation of at least $12.1 million of PulseChain investor funds.

The SEC contends these funds were used not for their intended purpose of developing and marketing the PulseChain network, but for Heart's personal luxury purchases, including a 555-carat diamond, expensive watches and high-end automobiles. In light of these allegations, the SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest and civil penalties.

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at