News

SEC Announces Charges for Unregistered Securities

The SEC‘s Allegations

The SEC announced charges against Richard Heart, also known as Richard Schueler, and three unincorporated entities under his control: Hex, PulseChain, and PulseX. The charges stem from their involvement in conducting unregistered offerings of crypto asset securities, which garnered over $1 billion in crypto assets from investors. Additionally, the SEC accused Heart and PulseChain of fraud, as they allegedly misappropriated at least $12 million of the offering proceeds to purchase luxury items, including sports cars, watches, and a massive 555-carat black diamond known as ‘The Enigma,’ reportedly the largest black diamond in the world.

The Alleged Scheme

According to the SEC’s complaint, Richard Heart started promoting Hex in 2018, marketing it as the first high-yield “blockchain certificate of deposit” and an investment opportunity that would make people wealthy. The alleged unregistered offering of Hex tokens occurred from December 2019 to November 2020, during which they collected over 2.3 million Ethereum (ETH). Heart purportedly gained control of more Hex tokens through deceptive “recycling” transactions.

Moreover, between July 2021 and March 2022, Heart orchestrated two more unregistered crypto asset security offerings, raising hundreds of millions of dollars for the development of PulseChain, a supposed crypto asset network, and PulseX, a claimed crypto asset trading platform. These offerings introduced their native tokens, PLS and PLSX, respectively.

Heart also marketed a “staking” feature for Hex tokens, claiming it could deliver returns as high as 38 percent. In an attempt to evade securities laws, Heart asked investors to “sacrifice” their crypto assets in exchange for PLS and PLSX tokens, rather than using the term “invest.”

SEC’s Stance and Allegations

Eric Werner, Director of the Fort Worth Regional Office, stated that Heart’s actions involved unregistered offerings and defrauding investors by diverting their crypto assets towards extravagant luxury purchases. The SEC’s legal action seeks to protect the investing public and hold Richard Heart accountable for his alleged misconduct.

Legal Action and Relief Sought

The SEC filed its complaint in the U.S. District Court for the Eastern District of New York, alleging that Richard Heart, Hex, PulseChain, and PulseX violated the registration provisions of Section 5 of the Securities Act of 1933. Additionally, the complaint accuses Heart and PulseChain of violating the antifraud provisions of the federal securities laws. As part of the legal action, the SEC seeks injunctive relief, the disgorgement of ill-gotten gains with prejudgment interest, penalties, and other equitable relief.


For more information, or to speak to a securities attorney, visit New York Securities Lawyer at www.securitieslawyer.us.

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