The US Securities and Exchange Commission (SEC) is suing entrepreneur Richard Heart for raising more than $1 billion from selling unregistered securities.
Heart allegedlyĀ hiredĀ developers to build three unincorporated projects PulseChain, PulseX, and Hex, offering investors a means to earn āgrandiose wealth.ā
SponsoredSEC Accuses Heart of Securities Fraud For Abusing Customer Funds
According to the SEC, Heart offered all three tokens inĀ productsĀ that passed the Howey Test. The investment vehicles should have been registered as securities with the agency.
āEach of the Hex,Ā PulseChain, and PulseX offerings involved investments of money in common enterprises with the reasonable expectation of profits to be derived based on the efforts of others.ā
Heart allegedly started selling Hex tokens in 2019.
According to the SEC, he promised investors āincentives and bonuses,ā marketing the assets as high-yield blockchain ācertificates of deposit.ā Investors could receive a 38% annual return on Hex tokensĀ stakedĀ for a long period.
According to the SEC, Heart and his team allegedly received 2.3 millionĀ ETHĀ in deposits in exchange for outsized returns but faked the inflows to promote the project to other investors. Additionally, the agency accused the Finland-based entrepreneur of using $12.1 million in investor deposits to buy luxury goods for himself.
SponsoredThe abuse of customer funds violates US securities laws. In the entrepreneurās defense, crypto venture capitalist Nic CarterĀ pointed outĀ that Heart didnāt try to conceal the purchases.
The SECĀ demandsĀ a trial by jury to force Heart to stop participating in securities trading.
SEC Continues Rampage Despite XRP Win
The lawsuit is the latest rebuttal to the industry the SEC chair recentlyĀ saidĀ is ārife with fraud and hucksters.ā
Ripple Labs recently scored a victory against the agency when US judge Analisa Torres ruled that sales of XRP through an exchange did not qualify as aĀ security. However, the judge did say that Ripple broke securities laws by sellingĀ XRPĀ to raise funds from institutional investors.
Learn more about the SECās fight with the crypto industry here.
The case notched aĀ partial winĀ for the crypto industry, which has questioned the SECās authority in governing the US crypto industry. The SEC hasĀ appealedĀ the ruling, but crypto lawyer John Deaton says a second circuit court appeal could take years.
US Democrats have stonewalled the passage of vital crypto laws the House Financial Services Committee proposed.
Got something to say about the SEC lawsuit against Richard HeartĀ crypto or anything else? Write to us or join the discussion on ourĀ Telegram channel.Ā You can also catch us onĀ TikTok,Ā Facebook, orĀ X (Twitter).
