The Securities and Exchange Commission on Monday charged Richard Heart, founder of the crypto projects Hex and PulseChain, with unregistered sale of more than $1 billion in crypto asset securities and the theft of $12 million of those funds to purchase a series of luxury goods.
The SEC alleges that Heart’s sale of Hex tokens was an unregistered securities sale, while a separate creation, PulseX was an unregistered securities exchange that featured a native token, PulseChain, that was also an unregistered security.
The complaint says that between August 2021 and September 2022, Heart “misappropriated at least $12.1 million” of PulseChain investor assets “to fund his purchases of luxury goods, including cars and watches.”
Heart allegedly spent $534,916 on a McLaren sports car, $314,125 on a “white Ferrari Roma,” and more than $1 million in total on three Rolex watches.
The complaint alleges that he spent $4.28 million on a 555-carat black diamond called “The Enigma,” which is “purportedly the largest black diamond in the world,” and did so with misappropriated PulseChain investor assets.
“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 SEC’s Fort Worth Regional Office, in a statement. “This action seeks to protect the investing public and hold Heart accountable for his actions.”
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