During the first half of 2023, the Securities and Exchange Commission (SEC) initiated a series of legal actions against players in the crypto industry. Thus, after Coinbase and Binance, it is the turn of the Hex, PulseChain and Pulse X entities to be in the crosshairs of the American financial policeman. Richard Heart, founder of Hex, PulseChain and Pulse X finds himself at the heart of a series of accusations. Indeed, the SEC accuses him of having illicitly enriched himself via these entities by making unregistered offers of crypto-asset securities. In total, he would have diverted at least 12 million dollars of the proceeds of these offers!
What are the facts ?
It all started in 2018.
That year, Richard Heart set out to market Hex, promoting the entity as the first high-yield “blockchain certificate of deposit”. He promoted Hex tokens as an investment designed to make people rich. His main argument? A promise of returns of up to 38%: enough to attract a maximum number of investors.
This strategy allowed him to sell, between December 2019 and November 2020, a maximum of Hex tokens within the framework ofan unregistered offer. In return, Heart was able to collect over 2.3 million Ethereum (ETH). He would even have taken the opportunity to “recycle” transactions and stealthily take control of a greater number of tokens. This news is by far the most scandalous.
According to the SEC investigation, the founder of Hex did not stop there. In 2021 and 2022, he orchestrated two new unregistered cryptoasset securities offerings that allowed him to raise hundreds of millions of additional dollars in cryptoassets. These funds were supposed to be used to support the development of a purported crypto asset network, PulseChain, and a purported crypto asset exchange platform, PulseX, through their native tokens, PLS and PLS respectively. PLSX.
Furthermore, Heart also allegedly attempted to evade securities laws. Indeed, he called on investors to “sacrifice” their cryptos in exchange for PLS and PLX tokens. These various actions ended up attracting the attention of the SEC who filed a complaint against him.
So what do we blame Richard Heart for?
Faced with the actions of Richard Heart, the SEC filed a complaint with the United States District Court for the Eastern District of New York. It must be said that this complaint comes after almost five years of warnings from crypto analysts.
The SEC complaint alleges that Hex, PulseChain and PulseX violated the registration provisions of Section 5 of the Securities Act of 1993. Also, according to this complaint, Heart and PulseChain violated the anti-fraud provisions federal securities laws.
As Fort Worth regional office manager Eric Werner asserts, Heart didn’t just call on investors to buy securities of assets in offers he didn’t register. He would then have “defrauded these investors by spending part of the funds raised to buy exorbitant luxury goods”!
For example, through PulseChain, Heart allegedly diverted over $12 million of the proceeds from the offering for personal purchases. These purchases include sports cars, watches and a 555 carat black diamond known as “The Enigma”. It would be the biggest black diamond in the world!
Through its lawsuit, the SEC wishes to “protect the investing public ” And “hold Heart accountable for its actions“. As a result, she sought an injunction, restitution of ill-gotten gains plus prejudgment interest, penalties and other equitable relief.
What is Heart’s reaction to the accusations?
Faced with the accusations against him, Richard Heart reacted in a rather controversial video. Indeed, he claimed that he was trying to make the world a better place and help people invest their money wisely. For him, the real enemy is rather the American financial policeman whose maneuvers he finds more than questionable.
This attempt to prove his innocence, however, does not convince the crypto community. She even made an exciting discovery: Heart would actually have several identities that he uses as he sees fit. This detail does not play in its favor, but rather corroborates the version of the SEC.
In sum, the SEC has initiated legal action against Richard Heart, founder of Hex, PulseChain and PulseX. He is accused of having stolen millions of dollars of funds from investors through his projects, then of having used them for his personal purchases. The case is being processed and is attracting a lot of interest from the crypto community.
Conclusion
The SEC case against Richard Heart transcends mere financial scandal to become a mirror reflecting the challenges and dilemmas of the entire crypto industry. Accused of embezzling millions and violating multiple laws, Heart finds itself at the center of a legal battle that could well chart a new course for cryptocurrency regulation. The survey lays bare current gaps and remaining vulnerabilities in a still-young industry, challenging trust and ethics in the crypto ecosystem. The upcoming judgment will not only be about Heart and its projects, but will be about the industry itself. Its outcome could become a precedent, influencing standards, policies, and perhaps even the future of crypto. In a world where technology is changing faster than the law, this case reminds everyone that integrity and transparency remain fundamental.
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