SEC Accuses Hex Founder of Offering Unregistered Securities

Richard Schueler’s Alleged Unregistered Offerings

The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Richard Schueler, also known as Richard Heart in the crypto space, for alleged unregistered offerings of three tokens, namely Hex, PulseChain (PLS) and PulseX (PSLX). According to the complaint filed on July 31 in the U.S. District Court for the Eastern District of New York, Heart had raised more than $1 billion through the sale of crypto asset securities.

The SEC claims that Heart had promised investors grandiose wealth in exchange for hundreds of millions of dollars in deposits. He also accepted more than 2.3 million Ether (ETH) between December 2019 and November 2020, worth around $678 million at the time, for Hex tokens, $354 million in exchange for PLS tokens, and $676 million for PSLX tokens.

Moreover, the SEC alleges that Heart and PulseChain defrauded investors by misappropriating at least $12.1 million of PulseChain investor funds. This money was used for Heart’s personal luxury purchases, such as a 555-carat diamond, expensive watches, and high-end automobiles, instead of being used for developing and marketing the PulseChain network, or even to fulfill Heart’s explicit statement that invested funds supported ‘freedom of speech’.

Heart’s Crypto Projects Under SEC Scrutiny

The U.S. Securities and Exchange Commission (SEC) is seeking permanent injunctive relief, disgorgement, prejudgment interest, and civil penalties against Heart and his crypto projects. Heart, a Finland resident, has been issued a civil summons requiring him or his legal team to respond within 21 days or risk a default judgment.

The SEC’s civil action is the latest in what many critics have referred to as a “regulation by enforcement” approach to crypto in the United States. The federal regulator has ongoing cases against crypto exchanges Coinbase, Binance, Circle Crypto, Celo Crypto, Chiliz Crypto, CFX Crypto, and Cartesi Crypto for similar allegations of unregistered securities offerings.

The crypto community has been skeptical of Heart’s Hex token, despite its price often making significant gains, reaching an all-time high of roughly $0.48 in 2021. Following news of the SEC lawsuit, the price dropped more than 26% from roughly $0.0084 to $0.0062.

Notably, Heart appears to have been removing references to Hex, PulseChain and PulseX from his social media posts and profiles. According to his X (formally Twitter) bio, Heart “doesn’t read messages, email, newspapers, magazines, letters, communication of any form or listen to the radio or nearly anything else.”

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