SEC Finally Serves Hex Founder Richard Heart with Lawsuit Alleging Fraud

Julia Smith
Last updated: | 2 min read

The United States Securities and Exchange Commission (SEC) has finally served Helsinki-based cryptocurrency developer Richard Heart with a lawsuit filed in July, according to a new court document.

Heart hides out

According to court documents, the SEC had been attempting to serve Schueler for over two months.

The latest court filing reveals that Heart (real last name Schueler) was served using a substitute service on October 31st in Helsinki, meaning the SEC was unable to physically deliver the lawsuit to Heart in person.

The substitute service, in accordance with Finnish law, provides an alternative means of delivery for defendants who are hard to track down.

“The multiple attempts of contacting Mr. Schueler (using different methods) over a period lasting nearly seven weeks have given ample time for a response from Mr. Schueler,” SEC attorney Matthew Gulde stated.

Over $12 million in investor funds misappropriated

Heart has been laying low since this past summer when the SEC filed the lawsuit against the crypto developer, alleging that he misappropriated millions in offerings and violated federal law through the sale of unregistered currencies.

The SEC is claiming that Heart raised more than $1 billion in unregistered crypto asset securities under the “vague purpose of supporting free speech.”

Heart, the founder of Hex, PulseChain, and PulseX, “did not disclose that he used millions of dollars of PulseChain investor funds to buy luxury goods for himself,” reads the SEC’s original complaint.

“Instead of using these investor funds to develop and market the PulseChain network, or even to fulfill Heart’s explicit statement that invested funds supported ‘freedom of speech,’ Heart and PulseChain used at least $12.1 million of investor funds for Heart’s personal luxury purchases, including a 555-carat diamond, expensive watches, and high-end automobiles,” the SEC complaint reads.

Nearly one-third of the investor funds were used to purchase the world’s largest black diamond, notably dubbed “The Enigma,” from Sotheby’s. 

“Heart purchased the diamond for £3,161,000 ($4.28 million at the time of the transaction), funding the purchase by transferring both ETH and fiat currency to Sotheby’s,” the complaint continues.

The undercover crypto developer has since gone on social media to refer to the purchase as the “ diamond” after his blockchain-based entity. 

A “flawless” entity?

While Heart is keeping his location under wraps, he has been particularly active on X, even publicly lauding Hex’s operations as “flawless,” “perfect,” “unstoppable,” and “immutable.”

“Hundreds of crypto things failed and $ billions were lost while HEX continues to operate flawlessly,” Heart posted. “Congrats everyone!”

The lawsuit “seeks to protect the investing public and hold Heart accountable for his actions,” said Eric Werner, Director of the SEC’s Fort Worth Regional Office.

The complaint concludes, in part, by requesting that Heart be barred from “participating, directly or indirectly, in the purchase, offer, or sale of any crypto asset security.”

It is currently unclear how Heart will respond going forward.