SEC Faces Difficulty in Serving Lawsuit to Richard Heart, Hex and PulseChain Founder – What’s Going On?

Hassan Shittu
Last updated: | 2 min read
SEC Building
Source: Adobe

The United States Securities and Exchange Commission (SEC) is encountering difficulties in serving a lawsuit against Richard Schueler, also known as Richard Heart, the founder of Pulsechain, PulseX, and the controversial project Hex.

On July 31st, the SEC filed a lawsuit against Heart for allegedly selling unregistered securities and defrauding investors. The SEC’s lawsuit accused Heart, Hex, PulseChain, and PulseX of violating federal securities laws through the unregistered offer and sale of securities. The complaint focused on the fundraising activities that raised over $1 billion for these projects. The SEC alleged that Heart defrauded investors through misappropriation of funds, diverting at least $12 million for personal purchases, including a McLaren sports car, a Ferrari, and five watches, instead of developing the protocols.

The lawsuit also targeted Heart’s control of the project, his statements regarding potential increases in value, and the staking feature designed to encourage token holders to lock up their tokens in exchange for more tokens. The SEC pointed to Heart’s previous comments claiming that Hex was built to be “the highest appreciating asset” and notes the significant decline in the price of Hex and the perceived worthlessness of tokens for the other two projects.

The SEC noted that the price of Hex experienced a staggering 98.4% decline from its all-time high, and the tokens for the other two projects, PulseChain and PulseX, are described as “practically worthless.” These assertions form the basis of the SEC’s claims of securities law violations, emphasizing the purported misleading statements by Heart regarding the potential appreciation of Hex.

SEC Faces Challenges Serving Lawsuit to Hex and PulseChain Founder Richard Heart

The U.S. SEC is encountering difficulties serving a lawsuit against Richard Schueler, also known as Richard Heart, the founder of Hex and PulseChain. The SEC alleges that Schueler sold unregistered securities, and despite requesting the Ministry of Justice of Finland to serve the lawsuit against Schueler in Helsinki, there has been no confirmation of successful service.

A teleconference initially planned for November 28 has been rescheduled to January 30, 2024, by Magistrate Judge Peggy Kuo, who oversees the case in the Eastern District of New York. The SEC’s complaint argues for jurisdiction in the Eastern District based on the assertion that many of the crypto asset transactions related to the case occurred on Uniswap, a decentralized crypto asset trading platform with developers headquartered in Brooklyn.

The SEC’s recent filing notes that the commission will update the court on the status of its service efforts under the Convention by December 15, 2023. If service has not been achieved by that time, the SEC plans to seek alternative service in accordance with Rule 4(f) of the Federal Rules of Civil Procedure.