SEC informs the court that Richard Heart has been served

Richard Heart, laminitis of blockchain projects PulseChain and HEX, was served with a suit by the U.S. Securities and Exchange Commission (SEC) connected Oct. 31 for alleged fraud and unregistered securities sales.

In a Dec. 11 filing, the SEC elaborate serving the lawsuit, adhering to Finnish instrumentality and the Hague Convention connected the Service Abroad of Judicial and Extrajudicial Documents. Heart resides successful Helsinki, Finland. Heart was charged by the SEC connected July 31, 2023.

The suit accuses Heart, who operates nether the entities Hex, PulseChain, and PulseX, of selling unregistered securities implicit a span of 3 years and misappropriating funds for idiosyncratic use.

Fraud allegations

The SEC’s archetypal ailment connected July 31 alleged that Heart defrauded investors and engaged successful the unregistered merchantability of crypto securities done his entities. These entities, each with its autochthonal token, were collectively progressive successful raising implicit $1 billion.

The SEC highlighted Heart’s relation arsenic the controlling unit down these projects, promising investors important wealth. However, it is alleged that a information of these funds, astir $12 million, was diverted by Heart for idiosyncratic luxury expenditures, including sports cars, watches, and a 555-carat achromatic diamond named “The Enigma,” rebranded arsenic the “HEX.com diamond.”

Heart has publicly criticized the SEC, claiming his efforts successful the crypto manufacture person been much effectual successful protecting investors than the regulator’s. According to a video clip that resurfaced from January’s HexConference, Heart accused the SEC of attacking beneficial aspects of the crypto satellite and neglecting to code important manufacture malpractices. He besides argued that his projects, including HEX, PulseChain, and PulseX, should not beryllium classified arsenic securities nether the Howey Test, emphasizing their decentralized quality and the deficiency of anticipation of nett from their buyers.

Heart launched HEX successful December 2019 and quickly attracted scrutiny from manufacture analysts and experts. Marketed arsenic the archetypal high-interest blockchain certificate of deposit, HEX was announced with the committedness of unprecedented growth, claiming imaginable returns exceeding 10,000x wrong 2 and a fractional years. The task received an influx of implicit 33,000 ETH, equivalent to astir $5 cardinal astatine the time, successful what was termed “donations” that were converted into HEX tokens.