Richard Heart was charged with allegedly raising over $1B through unregistered securities offerings.
The SEC also charged PulseChain, PulseX, and Hex, alongside Richard Heart.
In addition, Heart and PulseChain have also been charged for using part of the offering proceeds to buy luxury goods.
The US Securities and Exchanges Commission (SEC) has charged the founder of the crypto project Hex, Richard Heart, with allegedly raising more than $1 billion through unregistered securities offerings. The SEC has also included three unincorporated businesses (PulseChain, PulseX, and Hex) in the charges.
PulseChain and Richard Heart are also both facing charges for purportedly using $12 million from the funds raised through the securities offerings to buy luxury goods, including a 555-carat black diamond christened “The Enigma.”
Details of SEC’s charges against Hex
The SEC’s lawsuit has been filed in the United States District Court for the Eastern District of New York.
The SEC complaint states that the HEX founder started marketing Hex in 2018 claiming that “it was the first high-yield ‘blockchain certificate of deposit,” and started endorsing Hex tokens as an investment designed to make people “rich.”
The SEC is particularly wary of a staking function on Hex that Heart claimed would provide returns of 38% and claims that Heart intentionally tried to break the law by advising Hex investors to “sacrifice” their cryptocurrency holdings rather than invest in them.
Director of the Fort Worth regional office, Eric Werner, also weighed into the matter saying that Heart urged investors to purchase securities backed by cryptocurrency in offerings that he neglected to register and then went ahead to use some of the cryptocurrency assets to purchase extravagant luxury items.
HEX price reaction
The price of the HEX token had dipped by more than 27% to trade at $0.006461 at press time following the news of the charges.
The Hex charge came as the SEC also asked Coinbase to only offer Bitcoin (BTC) stating that all the other cryptocurrencies are securities.
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