SEC Charges Richard Heart and Entities With Unregistered Crypto Asset Offering and Fraud

The Securities and Exchange Commission has accused Richard Heart (aka Richard Schueler) and three entities he controls, Hex, PulseChain, and PulseX, of conducting unregistered offerings of crypto asset securities. The alleged offerings have raised more than $1 billion in crypto assets from investors, with $12 million of those proceeds reportedly used to purchase luxury goods. According to the SEC’s complaint, Heart began marketing Hex in 2018 while promoting Hex tokens as an investment designed to make people "rich," and initiated a “recycling” system which enabled him to take control of even more tokens. Additionally, Heart also engineered two other unregistered crypto asset security offerings which raised hundreds of millions more in crypto assets, funds which were intended to support the development of a crypto asset network called PulseChain, and a crypto asset trading platform known as PulseX. As a result of his transgressions, the SEC seeks injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, penalties, and other equitable relief against Heart, Hex, PulseChain, and PulseX for their violations of the registration provisions under Section 5 of the Securities Act of 1933 and for fraud under federal securities laws. The SEC’s continuing investigation is being conducted by Jaime Marinaro and Derek Kleinmann, both of whom are based out of the Fort Worth Regional Office. The litigation will be conducted by Matthew J. Gulde and supervised by B. David Fraser.