The US Securities and Exchanges Commission (SEC) has filed a lawsuit against the founder of the Hex crypto project, Richard Heart, and three unincorporated businesses (PulseChain, PulseX, and Hex). The complaint alleges that Heart raised more than $1 billion through unregistered securities offerings.
Heart and PulseChain have also been charged for using part of the offering proceeds to purchase luxury items, including a 555-carat black diamond called “The Enigma”. The lawsuit was filed in the United States District Court for the Eastern District of New York.
The SEC complaint states that Heart began marketing Hex in 2018 as a high-yield “blockchain certificate of deposit.” He also claimed that investing in Hex tokens could make people “rich”. In addition, the SEC has raised concerns about a staking function on Hex that Heart claimed would provide returns of 38%. He allegedly advised investors to “sacrifice” their cryptocurrency holdings rather than invest in them.
Eric Werner, Director of the Fort Worth regional office, commented on the charges, stating that Heart encouraged investors to purchase unregistered securities backed by cryptocurrency, and then used some of the cryptocurrency assets to buy luxury goods.
Following the news of the charges, the price of the HEX token had dropped by more than 27% to trade at $0.006461. The charges also come as the SEC urged Coinbase to only offer Bitcoin (BTC).
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