The SEC filed a fraud lawsuit against crypto influencer Richard Heart on Monday.
The SEC claimed Heart, whose real name is Richard Schueler, “raised more than $1 billion in the unregistered offer and sale of crypto asset securities.”
Through the lawsuit, the SEC said that the cryptoassets Hex, PulseChain and PulseX all constitute securities.
“Heart continually touted these investments as a pathway to grandiose wealth for investors, claiming that Hex, for example, ‘was built to be the highest appreciating asset that has ever existed in the history of man,” the suit said.
According to the complaint, Heart and PulseChain defrauded investors by “misappropriating at least $12.1 million of PulseChain investor funds,” which were used by Heart for expensive items such as a 555-carat diamond, luxury cars and watches.
Heart allegedly did not disclose the transfer of $217 million in investor assets to a private wallet, and he then “…used a so-called decentralized aggregator and the Mixer to conceal his misappropriation of PulseChain investor assets for his own personal use.”
The complaint goes on to list purchases made by Heart with the money he purportedly mixed – including Ferrari’s, McLaren’s and multiple Rolex watches.
Heart had previously bragged about his luxury outfits on social media, such as this “$10,000 #Prada fit.”
The lawsuit also targets the Hex staking program, which Heart alleged would benefit token holders. Despite not registering Hex tokens or the offering with the SEC, the website claims that staging “puts upwards pressure” on Hex’s price since it reduces the supply.
The SEC has previously targeted staking programs offered by Coinbase and Binance.
“Heart called on investors to buy crypto asset securities in offerings that he failed to register. He then defrauded those investors by spending some of their crypto assets on exorbitant luxury goods,” said Eric Werner, Director of the Fort Worth Regional Office, in the SEC’s statement on the suit.
Court documents charged Heart with fraud in connection with the sale of a security, fraud in offering the sale of a security and securities registration violations.
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Source: https://blockworks.co/news/sec-charges-heart