The allure of crypto markets, their seemingly boundless potential, and the excitement that surrounds them have, unfortunately, bred some unfavorable practices. Key among these practices are unregistered securities offerings – a line crossed by prominent crypto enthusiast, Richard Heart, according to the SEC.
Under his real name, Richard Schueler, Heart is accused of raising a staggering $1 billion via such offerings. More than this, the SEC claims Heart used the investor funds for personal whims, rather than directing them toward the advancement of his projects Hex, PulseChain, and PulseX. The Hex ERC-20 token was marketed as the foremost blockchain certificate of deposit, PulseChain serves as a layer-1 blockchain, and PulseX is a PulseChain-oriented decentralized exchange (DEX).
Boasted as a “route to grandiose wealth,” Heart’s projects certainly garnered their fair share of attention within the crypto community. However, the futurist allegedly admitted that any success from these ventures was largely down to his own efforts, fueling the aura of grandiosity surrounding these projects even further.
The SEC uses the howey test for classifying an asset as a security. It specifies that a constructive security contract exists if others’ efforts are expected to drive profits from a money investment in a common enterprise.
Going by the SEC’s lawsuit, Heart diverted a staggering $12.1 million from PulseChain investor funds for luxury purchases. Among his alleged transgressions were acquisitions of a 555-carat black diamond, several top-tier cars, and a range of costly watches. This gross misuse of funds intended for developmental purposes was a violation of federal securities laws as per the SEC’s allegations.
Yet this lawsuit arises amidst the SEC’s larger push for heightened crypto industry oversight in 2023. In fact, a recent FT report claimed the SEC ordered Coinbase to cease all cryptocurrency trade, barring bitcoin, asserting that almost all tokens are securities—a view voiced by the SEC Chairman Gary Gensler.
In spite of Heart’s hyped-up projects, HEX, PLS, and PLSX have underperformed dramatically, declining up to 99%, 87%, and 97% from their peak values. On Monday, these cryptocurrencies hit new lows, with HEX dipping an extra 30% to its lowest since December 2020, while PLS skidded over 40% to near its record lows. PLSX, too, plunged nearly 50% to its lowest after the token’s initial launch. Sure enough, the road to grandiose wealth seems to have taken a rather precipitous detour.
Source: Cryptonews
