The U.S. Securities and Exchange Commission filed a civil enforcement action on July 31, 2023 against Richard J. Schueler (known as Richard Heart) and three crypto projects he created and controls: Hex, PulseChain, and PulseX. The SEC alleged that, beginning in December 2019 and continuing for roughly three years, Heart and these entities conducted three large, unregistered crypto asset securities offerings that raised more than $1 billion worth of crypto from investors in the United States and abroad. According to the complaint, Hex was marketed as a high-yield “blockchain certificate of deposit,” with Heart promoting staking returns and positioning Hex, PulseChain (a purported blockchain network), and PulseX (a related trading platform) as investment opportunities. The SEC said Heart tried to avoid securities laws by framing contributions as a “sacrifice” of crypto assets in exchange for PLS and PLSX tokens, instead of calling them investments. Beyond the registration claims, the SEC also charged Heart and PulseChain with fraud, alleging that Heart misappropriated at least $12 million of investor funds for luxury purchases, including high-end sports cars, expensive watches, and a 555‑carat black diamond known as “The Enigma,” which regulators described as the largest black diamond in the world. The complaint, filed in the Eastern District of New York, sought injunctive relief, disgorgement of what the SEC called ill‑gotten gains, civil penalties, and other equitable remedies. The case formed part of the SEC’s broader effort to treat many token fundraising schemes as securities offerings subject to U.S. registration rules and disclosures, and it heightened scrutiny on high-yield, marketing-driven crypto projects that target retail participants. This enforcement action later became a significant jurisdictional test for the SEC’s reach over offshore crypto promoters. In February 2025, U.S. District Judge Carol Bagley Amon dismissed the case, ruling that the SEC had not shown that Heart’s conduct and token sales were sufficiently directed at U.S. markets to give the court jurisdiction. The judge emphasized that Heart resided abroad, his communications were globally accessible rather than specifically aimed at U.S. investors, and the tokens were not listed on U.S. exchanges, undercutting the SEC’s claim that U.S. securities laws governed the offerings. The SEC then declined to amend or refile the complaint, effectively ending the U.S. case even as Heart continued to face separate legal proceedings in Europe.

AI-generated background, compiled from web sources — not editorial content.

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