According to a complaint filed by the Securities and Exchange Commission (SEC), cryptocurrency influencer Richard Heart has been accused of defrauding investors and misappropriating millions of dollars obtained from the illegal sale of unregistered crypto asset securities. The funds were raised through Heart’s ventures, Hex, PulseChain, and PulseX, all of which he controls. The SEC claims that Heart used the money to make extravagant purchases, including a 555-karat black diamond worth $4.3 million, a Rolex watch worth $1.38 million, a McLaren sports car worth $534,916, and a Ferrari Roma worth $314,125.
In a January 2023 Hex Conference, Heart stated, “I want to be the best crypto founder that’s ever existed. I like owning the world’s largest diamond,” as cited by the SEC.
According to the complaint, Heart transferred $217 million from PulseChain’s crypto assets account into a private held wallet.
The SEC also charged Heart and his three entities, Hex, PulseChain, and PulseX, with conducting unregistered offerings of crypto asset securities that raised over $1 billion from investors, as stated in a tweet by the SEC.
Heart launched Hex in 2019, promoting it aggressively on his YouTube channel. He then began raising funds for PulseChain and PulseX, which he designed and maintained. The SEC alleges that Heart raised more than $1 billion through these entities, without disclosing that he used some of the investor funds for personal luxury purchases.
The SEC’s lawsuit also mentions that Heart accepted over 2.3 million ether tokens worth over $678 million, with a significant portion of them controlled by Heart and other insiders. This allowed them to manipulate trading volume and create the false impression of organic demand for Hex tokens.
The SEC is suing Heart for securities registration violations since all three of his crypto projects are considered unregistered securities. The lawsuit claims that each of the tokens should have been registered according to federal securities laws.
Regulators from the SEC are becoming more stringent in their oversight of cryptocurrencies following previous incidents such as the implosion of FTX and the crash of stablecoin TerraUSA and its sister token, luna. SEC Chairman Gary Gensler has stated that he believes the majority of tokens in the crypto market are securities.
Overall, these allegations against Heart highlight the importance of proper registration and transparency in the cryptocurrency industry to protect investors and maintain trust in the market.
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