The US Securities and Exchange Commission (SEC) has charged crypto influencer Richard Heart (aka Richard Schueler) with fraud for misappropriating at least $12 million of offering proceeds to purchase luxury goods including sports cars, watches, and a 555-carat black diamond known as ‘The Enigma’ – reportedly the largest black diamond in the world.
Heart and his three crypto securities -- Hex, PulseChain, and PulseX -- have been charged with conducting unregistered offerings of crypto asset securities that raised more than $1 billion in crypto assets from investors.
“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,” Eric Werner, Director of the Fort Worth Regional Office said in a statement.
“This action seeks to protect the investing public and hold Heart accountable for his actions,” he added.
According to the SEC’s complaint, Heart began marketing Hex in 2018, claiming it was the first high-yield “blockchain certificate of deposit,” and began promoting Hex tokens as an investment designed to make people “rich.”
Between July 2021 and March 2022, Heart orchestrated two additional unregistered crypto asset security offerings that each raised hundreds of millions of dollars more in crypto assets. Heart also allegedly designed and marketed a so-called “staking” feature for Hex tokens, which he claimed would deliver returns as high as 38 per cent.
Additionally, Heart accepted over 2.3 million Ethereum valued at around $678 million in exchange for Hex tokens, according to the SEC. He never revealed that he actually spent “millions of dollars of PulseChain investor funds to buy luxury goods for himself.”
Some of those purchases include a $534,916 McLaren sports car, a $314,125 Ferrari Roma, and a $1.38 million Rolex watch. In February 2022, he allegedly spent $5 million of investors’ assets to purchase ‘The Enigma’.
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