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HEX Founder Becomes the Next Target of the SEC - Richard Heart is Facing Fraud Charges

Updated: Aug 1, 2023

The SEC sued Richard Heart for selling unregistered securities via three entities under his control, Hex, PulseChain, and PulseX, and committing fraud by spending investor funds inappropriately.


HEX founder Richard Heart faces fraud allegations from the SEC.
Credit: Shutterstock Copyright: Copyright (c) 2017 Mark Van Scyoc/Shutterstock.

WASHINGTON - The US Securities and Exchange Commission (SEC) filed a lawsuit against the founder of blockchain projects PulseChain and HEX, Richard Heart - also known as Richard Schueler-for allegedly committing fraud by selling unregistered securities.


The lawsuit was filed on July 31, claiming that Heart sold unregistered crypto assets through three entities connected to him: Hex, PulseChain, and PulseX. According to the lawsuit, these three entities earned over $1 billion from selling unregistered securities over three years.


The SEC also charges Heart for misusing around $12 million of investor funds. The SEC claims the funds were supposed to be spent on improving PulseChain and PulseX. However, Heart spent a fair amount of this money on luxury goods like sports cars, watches, and the world’s largest diamond - a 555-carat black diamond known as “The Enigma.”


Director of the Forth Worth Regional Office, Eric Werner, commented on the lawsuit and stated:


“Heart called on investors to buy crypto asset securities in offerings that he failed to register. He defrauded those investors by spending some of their crypto assets on exorbitant luxury goods. This action seeks to protect the investing public and hold Heart accountable for his actions.”

The Hex Token and Pulse X


According to the complaint, Heart promoted the digital tokens connected to his three entities, the Hex Token and PulseX, as investments that’d bring “grandiose wealth” to its holders.


The Hex token responded to this lawsuit by plummeting over 98% from its peak. The token has fallen as low as $0.005048 in one day. It is currently traded for around $0.005890 at the time of writing.


Will the SEC win this time?


Years ago, the SEC filed a similar lawsuit against Ripple, claiming that the organization sold unregistered securities. After years of legal quarrel, Ripple secured a practical win against the SEC on July 13. According to the court ruling, Ripple’s native currency XRP didn’t fall under the securities definition; therefore, the charges were not applicable.


Even though the SEC vs. Ripple case didn’t officially end, this decision allowed the community to foresee the possible outcome of the case.


The SEC’s claims are more or less the same in their lawsuit against Heart. Therefore, the community is questioning whether the result will be the same.


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