SEC files suit against HEX founder Richard Hart

The U.S. Securities and Exchange Commission (SEC) подала a lawsuit against the founder of HEX, PulseChain and PulseX, Richard Hart, for alleged sales of unregistered securities.

In the SEC’s view, the entrepreneur raised more than $1 billion through the sale of tokens from three projects (HEX, PLS and PSLX), beginning in 2019. The lawsuit notes that he marketed them “as a path to enormous wealth for investors”.

“Hart urged investors to buy crypto-asset securities in offerings that he could not register. He then deceived these investors, spending a portion of their funds on luxury items,” the regulator said.

The complaint, filed in the Eastern District of New York, alleges violations of securities laws. In addition, the Commission also accused Hart of fraud — he allegedly misappropriated investors’ PulseChain funds.

“Rather than using these funds to develop and advance the network […], Hart and PulseChain spent no less than $12 million on luxury items,” the SEC added.

Specifically, the regulator mentions the rare black diamond The Enigma. In 2006 it was listed in the Guinness Book of World Records as the world’s largest cut diamond. In February 2022 Hart announced himself as the buyer of this stone at Sotheby’s auction for $4.29 million in cryptocurrency.

The agency sought a court injunction, disgorgement of ill-gotten gains, as well as the payment of interest and penalties.

The HEX token reacted to the news by dropping 25.3%, according to CoinGecko. The current price is $0.007.

HEX and Hart have frequently faced criticism from crypto-industry participants. An analyst using the pseudonym Goldman Sats suggested that the project pursues a single goal — to make its creator rich at the expense of other users.

Earlier in November 2022, the SEC sent subpoenas to influencers involved in promoting HEX, PulseChain and PulseX. Members of the community called the news fake at the time.

In 2020, HEX advertising appeared during English Premier League football matches. It claimed the platform’s native token rose 11,500% in 129 days.