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SEC Sues Richard Heart
On July 31, 2023, the U.S Securities and Exchange Commission (SEC) brought legal action against internet marketing expert Richard Heart. The lawsuit alleges that Heart engaged in unregistered offerings of crypto asset securities, fraud, and misappropriated millions of dollars of investor funds.
Heart is the developer behind crypto projects Hex and PulseChain, which are said to have raised over $1 billion. The SEC, however, asserts these projects were unregistered securities offerings—an infringement of federal law. The organization also claims that Heart failed to disclose crucial information to investors, leading them into these investments under incomplete information.
“Beginning in December 2019, and continuing for at least the next three years, Heart raised more than $1 billion in the unregistered offer and sale of crypto asset securities to retail investors in the U.S. and abroad,” the Lawsuit read. “Heart engaged in three separate offerings: Hex, PulseChain, and PulseX. Each was, and is, crypto asset security, and PulseChain and PulseX are crypto asset security platforms designed, created, and maintained by Heart.”
In addition, the lawsuit alleges misuse of investor funds on Heart's part. It suggests he misappropriated millions, splurging on personal luxuries such as high-end cars, timepieces, and a black diamond. These allegations, if proven, would further underscore the SEC's case against Heart's financial mismanagement and fraud.
“Heart, Hex, PulseChain, and PulseX violated the federal securities laws through the unregistered offer and sale of securities. Additionally, through the misappropriation of investor assets, Heart and PulseChain defrauded their investors,” the suit read.
The case status remains uncertain, with no clear date for when it will proceed to trial. The SEC's move against Heart indicates its ongoing commitment to regulate the cryptocurrency sector, as it seeks to provide more transparency and protection for investors.
This lawsuit serves as a reminder for all participants in the crypto space of the importance of compliance with federal securities laws. As it unfolds, it's likely to have wide-reaching implications for the broader crypto industry.