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News/Crypto Wizard Richard Heart Faces SEC Lawsuit Over Alleged $1 Billion Swindle

Crypto Wizard Richard Heart Faces SEC Lawsuit Over Alleged $1 Billion Swindle

Jul 31 2023

11 months ago3 minutes read
A robot detective holding a magnifying glass and inspecting documents related to the SEC lawsuit against HEX.webp

Richard Heart's Crypto Empire Unravels

Written by Van

The Securities and Exchange Commission (SEC) has taken legal action against the cryptocurrency wizard, Richard "Heart" Schueler. Heart's purported crypto wonders, HEX, PULSECHAIN, and PULSEX, are under scrutiny for alleged involvement in a billion-dollar unregistered security offering.

The Allegations

Since December 2019, Heart has come under the SEC's radar for allegedly offering unregistered security token, HEX. Over the course of three years, he is suspected to have raised over $1 billion not just from U.S. investors, but also those from overseas.

Several severe allegations lace the SEC's charges against Heart. He stands accused of flouting securities laws and artificially spiking the price of HEX, the token he pioneered. At the heart of the issue is the misappropriation of investor assets.

A magnifying glass hovering over documents and reports related to the SEC lawsuit against Richard Heart.webp

1. Misappropriation of Funds

One of the lawsuit's core accusations is Heart's supposed diversion of vast investor assets towards personal luxuries. Between August 2021 and September 2022, Heart allegedly spent an exorbitant $12.1 million of investor wealth on luxury cars and watches, with the SEC alleging Heart's taste for luxury cars such as a McLaren and a white Ferrari Roma. 

Even wrist-ware seemed to catch his fancy with Heart allegedly departing with a whopping $1.38 million for Rolex watches. Yet, the highlight of his alleged shopping spree is the $4.28 million he used from PulseChain investor funds to acquire "The Enigma," a black diamond reputed as the largest in the world.

2. Artificial HEX Demand

On flipping the coin to the other side of the token scheme, the SEC claims that Heart manipulated the demand for HEX. Approximately 94-97% of Ether (ETH) deposits into the associated wallet were "recycled" via a crypto trading platform. 

This recycling strategy allegedly served to orchestrate a facade of HEX demand while simultaneously granting control of large amounts of tokens to Heart and his associates.

3. Unregistered Securities Offering

Heart is also accused of marketing HEX as an investment opportunity, taking no steps to register it as such. This behavior is a tell-tale sign of conducting unregistered securities offerings. On countless instances, Heart professed that HEX could outdo both Ether and Bitcoin, even promoting it as the highest appreciating asset in human history.

Deepening Accusations

The attention to HEX's staking mechanism and the periods it was "locked up," reveal more about the alleged scheme. Heart supposedly manipulated HEX's supply through "recycling transactions," drawing further condemnation from the regulator.

Heart's potential lack of transparency also seems glaring in the lawsuit. He is accused of silently transferring $217 million in investor assets to his private wallet. And to cover his tracks, he used a decentralized aggregator and a Mixer, concealing his misappropriation of PulseChain investor assets.

The aftermath of these allegations negatively affected HEX, causing it to dip over 25% in the past 24 hours and exacerbating an already spiralling trend, given the cryptocurrency recorded a 28% loss in the past fortnight.


The Lawsuit and the Future

In the Eastern District Court of New York, SEC legal documents record Heart boasting about Hex's potential to become "the highest appreciating asset in human history." 

Now, the SEC is calling for a jury trial. The regulator demands Heart and his operations be for life barred from selling crypto securities. Moreover, it seeks to regain all ill-gotten wealth, pursue prejudgment interest, and impose a civil penalty.

The SEC opted for the U.S. District Court for the Eastern District of New York to file the lawsuit, mainly because numerous transactions were executed on Uniswap. Interestingly, the developers of this platform are based in Brooklyn.

More Regulatory Challenges on the Way

The U.S. Securities and Exchange Commission (SEC) asked Coinbase to delist all digital assets except Bitcoin, claiming they were securities—a move Coinbase disputed. In retaliation, Coinbase sued the SEC, stating such action would end the US crypto industries. The SEC denied this request and sued Coinbase for operating as an unregistered broker and listing high-risk assets. 

Meanwhile, the SEC faced a setback when a US appeals court ruled the SPIKES Index securities as "securities futures," overturning the regulator's 2020 exemption. These developments highlight the ongoing regulatory challenges and potential impacts on the future of the crypto industry.

Uniswap Removes HEX from User Interface Following SEC Lawsuit

The SEC's recently filed lawsuit against cryptocurrency entrepreneur Richard Heart has led to significant repercussions, with Uniswap, a trading venue named in the suit, now delisting Heart's token, HEX. According to the SEC, transactions involving unregistered securities had taken place on the decentralised exchange (DEX).

In response, Uniswap has taken the step of adding HEX to its unsupported tokens list. This list incorporates coins that have been delisted due to legal battles, tokens associated with scams, and those embroiled in trademark infringement cases.

uniswap delisted hex.webp
Source: Uniswap

HEX's removal, however, only affects Uniswap's front-end user interface. Interestingly, it can still be traded on the decentralized exchange. Despite the front-end interface delisting, traders can directly access HEX's smart contract to continue swap operations on Uniswap.

The SEC's crackdown on such issues extends beyond Heart. Several other crypto founders, including Alex Mashinsky, Changpeng Zhao, and Do Kwon, have also found themselves under the lens of the SEC in recent times. 

The regulator's increasing vigilance underlines the mounting regulatory challenges the crypto industry is currently facing, further emphasizing the need for all stakeholders to observe due diligence and abide by existing laws.


1. What is the SEC's lawsuit against Richard Heart about?

The SEC filed a lawsuit against Richard Heart alleging that he raised more than $1 billion through his cryptocurrency projects, HEX, PULSECHAIN, and PULSEX, in an unregistered securities offering, misusing investor funds for personal luxury spending.

2. How did the lawsuit affect the HEX token?

The HEX token took a hit following the lawsuit's news, diving over 11% in a single trading session and continuing a downward trend.

3. How did Heart allegedly manipulate the HEX supply?

Heart is accused of controlling the HEX supply by "recycling transactions" and manipulating the system to his advantage, which is a part of the SEC's allegations.

4. What did Heart allegedly do with the investors' money?

Heart allegedly transferred $217 million in investor assets to his private wallet using a decentralized aggregator and the Mixer. He reportedly used these funds to lavish himself with luxury items such as a 555-carat diamond, pricey cars and expensive watches.

5. What does the SEC seek from the lawsuit?

Through the lawsuit, the SEC aims to permanently bar Heart from selling crypto securities, recover illicit gains, secure prejudgment interest, and impose civil penalties.


SEC's lawsuit serves as a glaring reminder of the need for stringent regulatory compliance in the crypto world. The charges against Heart for unregistered securities offerings and misuse of investor funds punctuate the risks inherent in crypto investments--especially from entities that promise monumental yield. 

Investors are therefore urged to perform their due diligence before investing in any crypto project and to ensure that these ventures operate within the bounds of the law.

This article has been refined and enhanced by ChatGPT.

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