Crypto Influencer Richard Heart Faces SEC Lawsuit Over Lavish Spending of Investor Funds

Richard Heart, a prominent crypto influencer and operator of a YouTube channel promoting his crypto products, is facing a lawsuit from the U.S. Securities and Exchange Commission (SEC) over allegations of misusing investor funds to indulge in extravagant luxury purchases. The SEC claims that Heart used “at least” $12 million from the proceeds of his crypto products, including the Hex token and PulseChain, to buy a slew of luxury items, including sports cars, luxury watches, and a 555-carat black diamond called The Enigma — reportedly the world’s largest.

The lawsuit contends that Heart raised more than $1 billion through unregistered offerings of Hex, PulseChain, and PulseX crypto securities, marketing them as a surefire way to achieve substantial wealth for investors. The SEC accuses him of falsely promoting Hex as the “highest appreciating asset” in history.

Heart, who is a U.S. native but currently resides in Finland, claimed that the investments in his products were intended to support “free speech.” However, the SEC alleges that he concealed the fact that he utilized “millions of dollars of PulseChain investor funds” to indulge in luxurious personal expenses. Among the extravagant purchases were a $534,916 McLaren sports car, a $314,125 Ferrari Roma, and a $1.38 million Rolex watch. Most notably, in February 2022, he allegedly spent a staggering $5 million of investors’ assets to acquire The Enigma black diamond.

Furthermore, the lawsuit reveals that from December 2019 to November 2019, Heart accepted over 2.3 million Ethereum, valued at around $678 million, in exchange for Hex tokens. However, the SEC contends that 94 to 97 percent of these ETH deposits were part of “recycling” transactions, allowing Heart and other insiders to manipulate the market and create a false impression of significant trading volume and organic demand.

Eric Werner, the director of the SEC’s Fort Worth regional office, stated, “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. This action seeks to protect the investing public and hold Heart accountable for his actions.”

The lawsuit is part of a series of actions taken by the SEC against high-profile figures in the crypto space. Notably, Binance and its CEO Changpeng Zhao, Coinbase, and Tron founder Justin Sun are also facing lawsuits. However, Richard Heart’s case stands out for the sheer magnitude of luxurious spending (allegedly) funded by investors’ money. The SEC aims to safeguard the investing public and hold individuals like Heart accountable for potential fraudulent practices in the crypto industry.

Source: theverge

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