SEC Serves Richard Heart with Lawsuit Over Alleged Fraud

By: Eliza Bennet

The U.S. Securities and Exchange Commission (SEC) has served Richard Heart, founder of blockchain projects PulseChain and HEX, with a lawsuit. The lawsuit alleges Heart of fraud and unregistered securities sales. The SEC detailed the serving of the lawsuit in a Dec. 11 filing, adhering to Finnish law and the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents, as Heart resides in Helsinki, Finland.

Accordance with the lawsuit, Heart, who operates under the entities Hex, PulseChain, and PulseX, has been accused of selling unregistered securities over a span of three years and misappropriating funds for personal use. The SEC's initial complaint from July 31 alleges that Heart defrauded investors through his entities, each with its native token. These entities were collectively involved in raising over $1 billion. It’s alleged that approximately $12 million of these funds were diverted for personal luxury expenditures by Heart.

Despite the charges, Heart has argued that his efforts in the crypto industry have been more effective in protecting investors than the regulator's. He has also claimed that his projects should not be classified as securities under the Howey Test due to their decentralized nature and lack of profit expectations from buyers. Heart launched the blockchain certificate deposit HEX in December 2019 with an assertion of substantial growth.