The Securities and Exchange Commission has charged entrepreneur Richard Heart with conducting unregistered offerings of crypto asset securities, raising over $1 billion and defrauding investors of $12 million, part of which was used to purchase a 555-carat black diamond.
In a complaint filed in federal court in Brooklyn, the SEC accused Heart, also known as Richard Schueler, and three unincorporated entities under his control—Hex, PulseChain, and PulseX—of these unregistered offerings. According to the complaint, Heart began marketing Hex in 2018, touting it as the first high-yield “blockchain certificate of deposit” and promoting tokens as an investment designed to generate significant returns.
The SEC claims Heart and Hex sold Hex tokens in an unregistered offering, accumulating more than 2.3 million Ethereum through what were referred to as “recycling” transactions, which allowed him to secretly gain more control over Hex tokens. Between 2021 and 2022, Heart allegedly organized two additional unregistered crypto asset security offerings that collectively raised hundreds of millions of dollars in crypto assets.
Additionally, the SEC charges Heart and PulseChain with fraud for misappropriating at least $12 million in offering proceeds to finance luxury items such as sports cars, watches, and “The Enigma”—reportedly the largest black diamond in the world, which he bought for over $4 million at auction. Eric Werner from the SEC stated, “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.”