The U.S. Securities and Exchange Commission (SEC) is filing to sue PulseChain and Hex founder Richard Heart for securities fraud, mere days before the premiere of his vanity movie project, The Highest of Stakes.
With multiple serious charges against him and the potential for felony charges that may follow (should the Department of Justice follow the SEC’s lead), Heart looks set to discover the higher you rise, the harder you fall.
Richard Heart, one of the most instantly recognizable figures in crypto, is facing a string of charges from the SEC following a court filing on July 31.
The allegations against the crypto founder and influencer are damning. The SEC alleges Heart misappropriated at least $12 million in user funds, purchasing a string of luxury items including designer clothes, high-end watches, sports cars, and a 555-carat black diamond known as “The Enigma.”
The SEC lawsuit states Heart raised a billion dollars through the sale of Hex, PulseChain, and PulseX. All of these cryptocurrencies are securities, according to the SEC.
The lawsuit further alleges that around 94-97% of deposits into Hex were in reality recycled transactions. According to the SEC, Heart and fellow insiders used a string of intermediary wallets and exchanges to create the false appearance of organic demand, spending the same funds over and over to pump the price and accumulate ever larger quantities of Hex.
The prosecution of Heart creates a crisis of conscience for a crypto community that is no fan of the SEC, or of scam projects. On the one hand, the fact that one of the parties will lose the case should provide most spectators with a delicious hit of schadenfreude.
On the other hand, this joy diminishes in the knowledge that for this to happen the other party must win.
The Highest of Stakes
The timing of the SEC filing is especially unfortunate for Heart since his personal vanity documentary The Highest of Stakes premieres on August 3 in Miami.
The trailer for the documentary opens with a particularly interesting statement from the founder.
“This is the opportunity of a lifetime,” says Heart as he stares down at the camera. “Yes, every scammer in the world is going to tell you something similar, but in this case, you are actually going to have regret.”
The regret Heart predicted may now be landing closer to home than he ever imagined.
“I am in crypto for glory, I want to have the best cryptocurrency that has ever existed,” says Heart in another section of the trailer.
On August 3, in the darkened glow of the cinema, these statements and many more will gain a fresh meaning in the context of the SEC’s legal action.
As if to add to the irony, the documentary makers continue to promote the film as “The Tiger King of Crypto that’s selling out theatres nationwide!” – and whatever happened to Joe Exotic anyway?
Hex ‘Anti-Christ’ grows a heart
Such is the seriousness of the case facing Heart that Eric Wall, the outspoken crypto analyst and self-proclaimed Hex ‘anti-Christ’, is taking pity on his former nemesis.
Since 2018, Wall has been a constant critic of Heart and anything Heart put his name to. The two men have debated multiple times over the past few years, each forming a begrudging respect for the other.
In the aftermath of the SEC court filing, Wall initially stuck the knife into Heart, only to show contrition and delete a series of Twitter posts on the matter.
Explaining his decision, Wall said, “Deleted my [Twitter] thread about Richard – I was just informed he faces potentially a life sentence under US law.”
Wall’s own change of heart came after hedge fund manager (and self-made financial crime expert) Martin Shkreli weighed in on the case.
“I’d rather no one went to jail, especially for financial crimes, but that’s not the way the world works,” said Shkreli. “I can’t imagine the [Department of Justice] not copy-pasting this into an indictment. He’d be looking at life.”
The exchange prompted Wall to reconsider whether the prosecution of Heart makes for the happy victory lap he first imagined.
“This sent me through a shockwave of emotions I was not expecting,” said Wall upon realizing how serious Heart’s situation actually is.
The SEC alleges Richard Heart used at least $12 million in investor funds to purchase luxury goods. Lol. pic.twitter.com/IfMOBmTM3l
— Tiffany Fong (@TiffanyFong_) July 31, 2023
A tragedy in the making
While Wall experiences pity for his fallen frenemy, others in the crypto community are less forgiving.
Heart may have supporters and fanboys, but neither is he short of detractors. Sensing the moment Heart’s critics are lining up to take their shot, accusing him of theft, fraud, and worse. But as much as the words of ‘the haters” – as Heart calls them – may sting, the real hurt comes from regulators. For years Heart dared the SEC into action with his bombastic promotional zealous, his exorbitant personal spending, and the clownish caricature of his ridiculous attention-seeking persona.
Now that legal action is here, the situation for crypto’s clown prince looks incredibly precarious. It is a cautionary tale already told. Hubris carried this influencer too high, too close to the glaring gaze of the SEC, and now his dayglo designer wings are melting.