The SEC continues its crackdown on alleged securities violations. In its latest move, the agency charged Richard Heart, founder of Hex, with conducting unregistered securities offerings that raised over $1 billion.

The US SEC charged Richard Heart and three unincorporated entities under his control for allegedly conducting unregistered crypto asset securities offerings.

In a press release, the SEC announced it charged Richard Heart and three unincorporated entities under his control with conducting unregistered offerings of crypto asset securities that raised over $1 billion in crypto assets from investors. The entities controlled by Heart are Hex, PulseX, and PulseChain.

The agency further charged Heart and PulseChain with fraud, alleging they misappropriated at least $12 million in the offering proceeds to purchase luxury goods, including a 555-carat black diamond called “The Enigma.”

According to the SEC’s press release:

“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.”

The agency also claims:

“From at least December 2019 through November 2020, Heart and Hex allegedly offered and sold Hex tokens in an unregistered offering, collecting more than 2.3 million Ethereum (ETH), including through so-called “recycling” transactions that enabled Heart to surreptitiously gain control of more Hex tokens.”

According to the SEC, Heart also created and marketed a so-called “staking” feature for Hex tokens in which he claimed he could deliver returns as high as 38%. The SEC also takes issue with Heart’s attempt to evade securities laws by asking investors to “sacrifice” instead of “invest” their assets in exchange for PLS and PLSX tokens.

Eric Werner, Director of the Forth Worth Regional Office, commented:

“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.”

He added the SEC’s actions against the founder seek to protect the “investing public and hold Heart accountable for his actions.”

The SEC filed its lawsuit in the US District Court for the Eastern District of New York. The agency said Heart claimed Hex “was built to be the highest appreciating asset that has ever existed in the history of man.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.