Cryptocurrency

SEC Sues Richard Heart, Founder of Hex and PulseChain, for $1B+ Securities Fraud

sec sues richard heart, founder of hex and pulsechain, for $1b+ securities fraud
sec sues richard heart, founder of hex and pulsechain, for $1b+ securities fraud 3

The Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency figure Richard Heart, accusing him of defrauding investors out of over $1 billion through unregistered securities tied to his projects Hex, PulseChain and PulseX.

The SEC alleges that Heart portrayed the investments as pathways to “grandiose wealth” dependent on his efforts. He allegedly misappropriated at least $12 million in funds for personal luxury purchases.

The lawsuit contends the cryptocurrencies are securities that should have been registered and oversight applied. This represents the SEC’s latest action to crack down on unregistered crypto asset offerings.

Alleged Fraud and Misrepresentations

According to the SEC complaint, Heart promoted Hex, PulseChain and PulseX in videos and social media as opportunities for investors to achieve massive returns. He touted his own abilities as essential to the potential profits.

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Source | Twitter.Com

The SEC says this means the cryptocurrencies were investment contracts and therefore securities under the Howey Test. As such, Heart should have registered them with the SEC and provided mandated disclosures.

The regulator accused Heart of violating securities laws by failing to register the $1 billion+ in assets. It also alleges he defrauded investors by misappropriating funds for personal extravagances.

Heart also reportedly claimed the ventures would be the “highest appreciating asset that has ever existed in the history of man.” The SEC classified these as misrepresentations downplaying investment risks.

Ongoing Crypto Crackdown

The lawsuit represents the SEC’s continued crackdown on crypto assets it deems unregistered securities amid a turbulent market downturn.

SEC Chair Gary Gensler has repeatedly argued that most cryptocurrencies fall under the agency’s securities jurisdiction, other than Bitcoin. He has pushed crypto platforms to comply with securities laws.

Some platforms like Coinbase have rejected the SEC’s security designation of certain crypto assets. But the regulator has continued filing lawsuits and investigations related to digital asset offerings.

The action against Heart exemplifies the SEC’s aggressive campaign to regulate crypto issuances and exchanges under its investor protection mandate. However, critics argue it overreaches into commodities oversight.

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