The Securities and Exchange Commission is suing crypto influencer Richard Heart over allegations that he spent “at least” $12 million of the proceeds from his crypto products on high-end goods. That includes investing on sports vehicles, pricey watches, and The Enigma, a 555-carat black diamond that is purported to be the biggest in the world.
Heart presently resides in Finland but was born in the US. Since 2017, he has run a YouTube channel where he advertises his own cryptocurrency goods, such as the Hex token and its sibling product PulseChain, which uses the PulseX protocol.
Hex token
HEX was a cryptocurrency and blockchain project launched in December 2019 by Richard
Heart. HEX was designed to be a high-interest blockchain certificate of deposit (CD) on the Ethereum network, aiming to offer users the opportunity to stake their HEX tokens and earn interest over time.
One of the notable features of HEX was its claim process, where users who held Bitcoin (BTC) during a specified snapshot period were able to claim free HEX tokens. HEX’s supply distribution was primarily driven by this “Bitcoin FreeClaim” mechanism, which allocated a portion of the HEX supply to Bitcoin holders who participated in the claim process.
It is important to exercise caution when dealing with cryptocurrencies, as the market is highly volatile and subject to regulatory changes. Cryptocurrency projects can evolve or face challenges over time, so it’s essential to conduct thorough research and due diligence before investing in any project or token.
The SEC asserts that despite Heart’s assertions that the investments in his products were made to support “free speech,” he never disclosed that he had really used “millions of dollars of PulseChain investor funds to buy luxury goods for himself.” Among them are a $1.38 million Rolex watch, a $314,125 Ferrari Roma, and a $534,916 McLaren sports car. He allegedly spent $5 million of the assets of investors in February 2022 to buy The Enigma.
The lawsuit also claims that Heart accepted over 2.3 million Ethereum worth about $678 million in return for Hex tokens from December 2019 to November 2019. The SEC asserts that 94 to 97 percent of these ETH contributions were “recycling” transactions that let Heart and other insiders to control “a significant number of” cryptocurrencies.
Heart urged investors to purchase securities backed by cryptocurrency in offerings that he neglected to register. Then, by using some of their cryptocurrency assets to purchase extravagant luxury items, he deceived those investors, according to Eric Werner, the head of the SEC’s Fort Worth regional office. This action aims to safeguard investors and hold Heart responsible for his deeds.
This comes after a string of SEC litigation that have been filed over the past few months. The SEC is pursuing legal action against Coinbase and Justin Sun, the founder of Tron, in addition to filing a complaint against Binance and its CEO Changpeng Zhao. But of all these lawsuits, this one stands out due to the enormous number of expensive goods that Heart (supposedly) spent money from investors on.
Background
Heart, 43, grew up in the United States but now resides in Finland. Heart has a YouTube account with more than 150,000 subscribers and is active on social media. The channel features music videos, promotional material for Heart’s cryptocurrency businesses, and images of his designer clothes purchases. The SEC, which contends that most cryptocurrencies other than bitcoin are securities under U.S. law and that crypto businesses must adhere to the same laws as regular financial institutions, has taken legal action against several prominent cryptocurrency players. The agency filed a lawsuit against Binance, the biggest cryptocurrency exchange in the world, last month, alleging that founder Changpeng Zhao sometimes misused customer cash by transferring them to a different trading business. According to reports, Zhao’s other company Merit Peak received billions of dollars from Binance. In addition, the SEC is also suing competing exchange Coinbase.
Disclaimer
Remember, investing in cryptocurrencies involves risks, and it’s important to conduct thorough research and seek professional advice before making any financial decisions.
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(Please keep in mind that this post is solely for informative purposes and should not be construed as financial or investment advice.)
