On Thursday, an Eastern District of New York courtroom filled with over 70 bystanders to hear Richard Heart’s lawyers argue his case for dismissing the SEC’s lawsuit against him and his crypto projects HEX, Pulsechain, and PulseX.

At the outset, Heart’s lawyers contested jurisdiction, asking the judge to dismiss the lawsuit entirely because, in Heart’s view, the SEC lacks jurisdiction over him and the entities it is suing.

Heart says that, although he grew up near Pittsburgh, Pennsylvania, he lived in Finland and elsewhere abroad during the time periods in question. Moreover, he believes the unincorporated entities HEX, Pulsechain, and PulseX are not subject to the jurisdiction of US courts.

First order of business: Jurisdiction

Heart’s lawyers used a considerable portion of Thursday’s oral argument to argue their stance on the SEC’s lack of jurisdiction. They explained why Heart believes the SEC did not plausibly allege a domestic securities transaction, failed to satisfy pleading requirements, and failed to plausibly allege how HEX, Pulsechain, and PulseX transactions passed the US Supreme Court’s Howey Test.

According to one “Hexican” who attended the hearing live, “We pretty much won on that front that this is out of the SEC’s jurisdiction. You know, obviously you can’t sue open-source software.” Of course, whether or not the SEC has jurisdiction is up to the judge, not bystanders. She has not yet filed her determination.

That bystander also claimed that the SEC’s chronology of events contained errors that weakened the commissioners’ case during Thursday’s hearing.

For context, that same bystander soon fawned that Heart’s lawyers “adjusted the syntax of my mind” as “a chill ran up my spine.” He claimed the SEC was trying to “take away people’s right to transact” and glowed about how “it really felt we were part of something really special. I feel like Richard Heart changed the syntax of how the legal system is going to have to grapple with this new technology.”

Read more: Finland wants to detain Richard Heart, alleges millions in unpaid taxes

Next steps for HEX and Heart’s motion to dismiss

After discussing jurisdiction, Heart’s lawyers asked the judge to discredit the SEC’s fraud claims. 

The SEC’s stance is that Heart committed fraud by using investor funds for personal gain, selling Hexicans’ contributions of ETH and other altcoins to buy personal luxuries like watches.

Heart’s lawyers spent most of their time focusing on his repeated reminders to his fans that they should never expect to profit from the efforts of others. These prominent disclaimers, in addition to other factors, allegedly discredit the SEC’s fraud claims.

Within a few days, Judge Amon will decide whether the SEC’s case against Heart will continue as originally pleaded. The judge may grant or deny Heart’s motion to dismiss in full or in part.

Observers may watch the docket for her upcoming determination. A decision might take up to 90 days.

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The post Richard Heart tells court full of US investors that HEX wasn’t aimed at them appeared first on Protos.

Finnish police want to detain crypto fugitive Richard Heart on suspicion of assault and gross tax evasion believed to be in the region of several hundred million euros. 

The remand order for Heart, real name Richard Schueler, was issued by Finnish police last Friday. Heart is suspected of owing tax in Finland after the country’s tax administration found his returns did not match up with its assessment. 

Helsinki police detective Harri Saaristola told Finnish publisher Yle, “It is then a matter of neglecting to report [income] or offering false information.”

He added, “Based on the very considerable amount of money in question and the long-term and planned nature of the activity, there are grounds to suspect gross tax evasion.” 

Read more: Richard Heart claims SEC lawsuit infringes his free speech

The US Securities and Exchange Commission (SEC) charged Heart in July 2023 with misappropriating investor funds, accusing him of stealing millions of dollars through Hex, PulseChain, and PulseX and using it to buy watches, cars, and other luxury goods.  

Heart attempted to dismiss the lawsuit last April. His current whereabouts remain unknown but his home is reportedly in Helsinki, Finland’s capital. 

The remand order says his alleged tax avoidance took place between June 2020 and April 2024, while the suspected assault happened between February 16 and 17, 2021. The Finnish investigation is said to be in its early stages and is being carried out in conjunction with international authorities.

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The post Finland wants to detain Richard Heart, alleges millions in unpaid taxes appeared first on Protos.

When the SEC revealed the untold history of Richard Heart’s crypto projects in July last year, his use of investor money was an aside. At the time, ‘Hexicans’ — fans of his flagship project, HEX — were buying tickets for the debut of his feature-length movie. Rather than question Heart’s extravagant lifestyle, many chose to focus instead on the never-before-published history of his supposed ‘blockchain certificate of deposit.’

Oddly, HEX was down 99% from its high by the time his movie premiered.

Heart’s fans have always known that he, like many crypto founders, was rich and flaunted expensive purchases. Nevertheless, he had always promised his fans that his wealth came from elsewhere — his prior business from which he generated millions of dollars.

However, as Eric Wall explained, that was simply a tactic pulled from a book about cult leadership.

“He has literally read books on how to create cults. I think it’s called The 48 Laws of Power. That book outlines these things he did, like sacrifices, adorning himself in jewelry, claiming to be a self-made millionaire, and always claiming the source of his wealth came from elsewhere. Richard applied the lessons from that book almost verbatim.”

-Eric Wall

In a more recent court filing, SEC commissioners claim that Heart knowingly stole from his fans to buy watches, cars, and other luxury goods. According to the SEC’s opposition to Heart’s motion to dismiss, filed yesterday, Heart acted with scienter — intentional illegality — in misappropriating investor funds.

According to the SEC, Heart “knowingly engaged in a series of labyrinthine transactions designed to obscure his movements of newly invested PulseChain funds.” (PulseChain and its PLS coin was Heart’s second blockchain project, promoted to his HEX audience and partially funded with HEX tokens.) 

Read more: The Highest of Stakes with Richard Heart encapsulates the narcissism of crypto

SEC explains Richard Heart and ‘scienter’

Commissioners continued, “Heart knowingly spent millions of dollars of investor funds on personal luxury items.” To avoid any ambiguity, they reiterate, “Heart knew that he had not purchased his watches, cars, and large black diamond with actual profits from his enterprises, but with funds from investors.”

Driving the point home, “Heart was conscious of his misuse of invested funds.”

The lawsuit between the SEC and Heart’s projects HEX, PulseChain, and PulseX continues. The SEC responded to other legal matters in its filing yesterday, and a judge will soon rule on whether a motion to dismiss will be granted, or whether the case will proceed further toward discovery and trial.

Edit 16:47 UTC, Aug. 23: Removed a reference to Eric Wall doing business with Richard Heart.

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The post Richard Heart intentionally stole from Hexicans says SEC appeared first on Protos.

HEX founder Richard Heart has finally filed his Motion to Dismiss in the Eastern District of New York. Heart has been preparing to write the document — probably the most important he has ever written — for years.

The filing requests US District Court Judge Carol Bagley Amon to toss out the Securities and Exchange Commission’s (SEC) lawsuit against him and his three crypto projects: HEX, PulseChain, and PulseX.

Heart (real name Richard Schueler) founded HEX — which currently sits 98% down from all-time highs — and is also behind blockchain token PLS and exchange token PLSX. These are both also trading far below their all-time highs.

The SEC claims that Heart sold all three tokens to investors in unregistered securities transactions and raised over $1 billion in violation of US law. To protect US residents from further harm and fraud, commissioners have requested disgorgement of ill-gotten revenue, accumulated interest, fines, and permanent injunctions.

Read more: Crypto Twitter dunks on Richard Heart over a 2-year-old HEX ‘rug pull’

Most important document of Richard Heart’s career

A motion to dismiss is a defendant’s first, formal argument to a judge on why a lawsuit should be terminated. The document usually argues that the plaintiff has failed to adequately allege jurisdiction, grounds, and other matters of fact and law.

In his motion to dismiss, filed by his lawyers at Quinn Emanuel, Heart claims that he’s resided abroad and didn’t aim any securities offerings at US investors. He also claims that neither of his three tokens created any investment contract. Finally, he says that his speech and crypto activities are protected by the First Amendment of the US Constitution.

All of these claims, in the HEX, PulseChain, and PulseX founder’s opinion, mean that the SEC has insufficient jurisdiction and grounds to sue.

Another motion to dismiss from a crypto promoter

Topically, the arguments are similar to many other motions to dismiss by crypto executives. A tiny number of these arguments have prevailed while the vast majority have failed. Despite a decade of anti-SEC rhetoric by hundreds of crypto defendants, the SEC has won almost every lawsuit it has filed against crypto promoters.

Of course, the particulars of each case matter. To review Heart’s unique actions, a senior District Court judge will be weighing arguments from government attorneys and Quinn Emanuel attorneys.

Heart has been aware of legal opinions that HEX likely violated US laws since at least 2019. He spoke with attorney Jason Seibert for hours during a legal review of HEX, wherein Seibert told Heart that he believed in “evidence of an unregistered offering on nearly day one. He basically admitted to violations on day one.”

Undeterred, Heart continued promoting HEX for years. He doubled down by founding other crypto assets, PulseChain and PulseX and now awaits a US court ruling on whether his actions were lawful.

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The post Richard Heart claims SEC lawsuit infringes his free speech appeared first on Protos.

On Sunday, a prominent member-turned-critic of Richard Heart’s HEX community, Eric Wall, tweeted an intraday chart of HEX-on-Ethereum’s collapsing price. He was dunking on Heart for allegedly causing the HEX rug pull and crypto members on X (formerly Twitter) duly dogpiled. They laughed, clicking the Like button on tweets about HEX’s supposed collapse tens of thousands of times.

Within hours of Heart’s tweet, HEX-on-Ethereum traded 68% lower.

Read more: Richard Heart and the curious launch of Hex, Pulse, and PulseX

In reality, Heart didn’t rugpull HEX on Sunday. Nor has the value of HEX declined over the past three months.

To explain: HEX exists on two blockchains: Ethereum and PulseChain. Heart started HEX on Ethereum but claimed to migrate his focus to PulseChain in order to spare ‘Hexicans’ from Ethereum’s high fees. PulseChain, he claims, is faster and cheaper.

For context, Heart is an ex-Bitcoin maximalist who defected and created three altcoins: HEX, PLS, and PLSX. HEX is his flagship creation, featuring the ability to lock up HEX on-chain for future rewards. PLS is a fee (‘gas’) token for the PulseChain blockchain, and PLSX is a reward token for its most popular exchange.

The SEC is currently suing Heart, Hex, PulseChain, and PulseX for violating federal securities laws.

HEX on two blockchains

On Sunday, when Heart endorsed HEX-on-PulseChain and disavowed HEX-on-Ethereum, the price of HEX-on-Ethereum did crash -70% intraday (-54% as of publication time). That reduced its fully diluted valuation from approximately $6.4 billion to $2.6 billion as of publication time*: a loss of $3.8 billion for HEX-on-Ethereum.

However, the price of HEX-on-PulseChain increased on Sunday. Specifically, it rallied 11% as of publication time, up from approximately $11 billion to $12.3 billion as of publication time*: a gain of $1.2 billion for HEX-on-PulseChain.

In sum, the fully diluted market capitalization of HEX-on-Ethereum did, indeed, decline more than the offsetting rise in the fully diluted market capitalization of HEX-on-PulseChain.

However, there are two other complicating factors that make it difficult to conclude that Heart meaningfully caused any crash in the value of HEX on Sunday.

No HEX rug pull, just a slow decline

First of all, the launch of PulseChain coincided with a free duplication of all HEX-on-Ethereum (including unstaked and staked HEX) onto PulseChain. Any long-term holder of HEX prior to PulseChain’s debut received free HEX on PulseChain. Therefore, no long-term holder can be harmed by a decline in the value of HEX on Ethereum versus PulseChain — because they own an equal number of tokens on both blockchains.

Secondly, Heart has consistently emphasized the long-term nature of HEX staking. Therefore, considering a trailing period of three months rather than 24 hours, the USD value of HEX-on-Ethereum is trading flat near $0.0046. Over that same period, in contrast, the USD value of HEX-on-PulseChain has increased 60%.

Therefore, on the whole, the fully diluted valuation of HEX across both Ethereum and PulseChain blockchains has actually increased by over $6 billion within three months.

Still no excuse

This does not excuse, of course, the disastrous overall decline in the value of Heart’s altcoins which might never regain their all-time high market capitalization of $85 billion. Nor does it excuse years of sketchy behavior of the evasive founder. Moreover, it doesn’t answer questions about Heart’s lavish personal expenditures or diversions of the ETH and stablecoin collateral that once backed some of the briefly stratospheric valuations of HEX, PLS, and PLSX.

Read more: The SEC can’t get in touch with Richard Heart, now what?

To little avail, Heart tried to point this out. Using his newly preferred nomenclature (referring to HEX-on-PulseChain as simply ‘HEX,’ despite his prior years of using ‘HEX’ in reference to HEX-on-Ethereum), Heart noted that HEX-on-PulseChain rallied 57% intraday on Sunday. That is true. Specifically, HEX-on-PulseChain has a larger fully diluted market capitalization than HEX-on-Ethereum, according to CoinGecko, which makes that 57% rally even more meaningful.

Regardless, skeptics dogpiled onto posts by Eric Wall (600 likes), Pledditor (1,400 likes), Wicked (330 likes), Stacy Herbert (770 likes), Mike Alfred (320 likes), and other crypto influencers. All laughed at the supposedly predictable, inevitable rug pull of HEX that consummated on Sunday.

The problem is that the rug pull didn’t actually occur yesterday. Nor over the last three months.

Instead, the decline in Heart’s altcoins has happened slowly — for the two and a half years since September 2021.

*Note: All market capitalization and price figures use CoinGecko data as of UTC 05:49:00 UTC on Monday, March 11, 2024. There is disagreement about the circulating supply of HEX across both blockchains. For this reason, CoinGecko does not display the market capitalization for either token.

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The post Crypto Twitter dunks on Richard Heart over a 2-year-old HEX ‘rug pull’ appeared first on Protos.

Hex and PulseChain founder Richard Heart was scheduled to appear in court via teleconference on Tuesday, November 28 as part of a billion-dollar lawsuit by the Securities and Exchange Commission (SEC) — but a Sunday filing says the SEC has yet to properly serve him.

The SEC charged Richard Heart, née Richard Schueler, with civil fraud at the end of July. According to the commission, Heart and PulseChain defrauded investors by misappropriating funds — using at least $12 million to buy personal luxuries. Heart, PulseX, and Pulsechain have also been accused of committing a variety of legal violations, including offering unregistered securities to US investors.

Heart was meant to be served via the Ministry of Justice of Finland, since he resides in Helsinki. At press time, however, the SEC still hasn’t heard back.

“To date, the Commission has not received confirmation of service of process on Defendants in Finland pursuant to the [Hague Service] Convention,” a recent filing by the SEC read.

Read more: SEC charges Richard Heart and PulseChain with civil fraud

The teleconference has therefore been postponed to January 30, 2024 by the judge overseeing the case for the Eastern District of New York, Magistrate Judge Peggy Kuo. The SEC added that it will update the court about whether Heart has been served by December 15.

If the Ministry of Justice of Finland still hasn’t managed to carry out the deed, the SEC will “move for alternative service in accordance with Rule 4(f) of the Federal Rules of Civil Procedure.”

According to these rules, the SEC may attempt to personally deliver the summons to Richard Heart or send a courier that requires a signature.

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The post The SEC can’t get in touch with Richard Heart, now what? appeared first on Protos.

Hackers gained access to Donald Trump Jr’s X account this week, using it to post a series of inflammatory messages. This included announcing the ‘death’ of former president Donald Trump Sr, proclaiming Richard Heart to be innocent, and threatening to “burn the SEC.”

The account, which boasts over 10 million followers, was hacked on Wednesday morning with those responsible immediately posting “I’m sad to announce, my father Donald Trump has passed away. I will be running for president in 2024.”

This was followed minutes later by a message that read, “Richard Heart is innocent, when I become president I am going to burn the SEC. @RichardHeartWin.”

Soon after, the ante was upped again with a post proclaiming, “This just in: North Korea is about to get smoked.“

Hex founder Heart is currently facing legal charges from the Securities and Exchange Commission (SEC). It alleges Heart misappropriated at least $12 million of his token sales to buy personal luxuries, including a 555-carat black diamond known as ‘the Enigma.’ 

Despite the allegations, devoted HEX fans remain optimistic that Heart will somehow beat the SEC’s allegations. His three projects, Hex (HEX), PulseChain (PLS), and PulseX (PLSX) dropped by 87% in August from their all-time highs.

The account also used a racial slur to describe Joe Biden, claimed to have had sex with Logan Paul’s partner, and alleged it had exchanged “interesting messages” with Jeffrey Epstein.

Within an hour the tweets had been deleted, however, some still garnered as many as 600,000 views. The Trump organization has since confirmed the account was hacked.

Dr. Aram Sinnreich, a professor of communication studies at American University, told Forbes that, “X has fired most of its data security professionals and eliminated many of its data security protocols, which makes it particularly vulnerable to hacking.”

He added, “the truth is that every social media profile is just one well-written ‘phishing’ email away from being hacked.”

The X account of Ethereum founder Vitalik Buterin was also hacked. This resulted in the loss of $691,000 worth of crypto assets from those unlucky enough to follow the direction of the links shared by the account.

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The post Donald Trump Jr says ‘Richard Heart is innocent’ in X account hack appeared first on Protos.

Richard Heart’s three coins Hex (HEX), PulseChain (PLS), and PulseX (PLSX) have lost money for the vast majority of investors. Indeed, the projects are currently worth at least 87% less than their all-time highs.

The market capitalizations for these tokens are also worth far less than the dollar value of the ether used to buy HEX during its launch phase as well as the $1 billion value of all sacrifice-themed crypto investments that unlocked PLS and PLSX.

• PulseX peaked at $0.000139 in May. It’s now trading at less than $0.000012 — a decline of -92%.
• PulseChain shows a similar story with an all-time high of $0.0000278 and a current value of $0.00004352 — a decline of -87%.
• Hex hit an all-time high of $0.55 and has crashed -99% to $0.004.

Near-worthless PLS delisted from its only major exchange

OKX has already announced plans to delist its PLS/USDT spot trading pair. The exchange suspended deposits and plans to freeze trading and withdrawals on August 31. That trading pair on OKX is responsible for over 97% of PLS’ trading volume displayed on CoinGecko.

PulseChain is Richard’s version of Ethereum; PulseX is Richard’s version of Uniswap. As Ethereum users can pay ETH for gas fees to use Uniswap, PulseChain users can pay PLS for gas fees to use PulseX.

HEX, meanwhile, is an older ERC-20 token that trades mostly on Uniswap.

Read more: The Highest of Stakes with Richard Heart encapsulates the narcissism of crypto

The SEC’s billion-dollar lawsuit against Richard Heart

The SEC has filed legal charges against Richard Heart, whose legal name is Richard J. Schueler. Commissioners also named HEX, PulseX, and PulseChain in the lawsuit.

The SEC alleges that Heart misappropriated at least $12 million of his token sales to buy personal luxuries. It cited the 555-carat black diamond widely known as “the Enigma,” which Heart bought in February 2022. The court date for this SEC lawsuit has been set for November 28.

For years, HEX was Richard Heart’s only proprietary token. Eventually, he finished work on his “better than Ethereum” PulseChain and “better than Uniswap” PulseX. However, a delayed and troubled launch was compounded by lackluster performance and an unfortunately-timed HEX crash.

The HEX, PulseX, and PulseChain “army” barely seemed deterred by the challenges, however, expressing confidence that Heart will somehow prevail over the SEC.

Read more: SEC charges Richard Heart and PulseChain with civil fraud

However, despite their confidence, the SEC looks to have the upper hand in this case, given how much Heart has promoted his tokens as investments that could make people rich. He’s certainly never missed a chance to flaunt the luxuries he bought with his allegedly ill-gotten gains, even bringing it up multiple times in the documentary The Highest of Stakes.

The SEC latched onto Heart’s gaudy flashes of wealth as signs that he misdirected some of the investment funds from people who bought HEX, PulseX, and/or PulseChain. Now, the whole ecosystem might be collapsing onto bagholders as their market capitalizations dwindle by the week, and Heart finally starts to face the consequences of his actions.

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The post Richard Heart’s tokens tank as billion-dollar lawsuit looms appeared first on Protos.

I usually start my reviews quite confident of what I’m going to write. For instance, before reading the BitBoy book it was easy to know what I was getting into simply by watching several of his obnoxious YouTube videos.

I figured The Highest of Stakes, a documentary about a cryptocurrency known as Hex and its founder Richard Heart), would be similar. Heart’s real name is Richard Schuler. He’s loud, unpleasant, and narcissistic. Heart volunteered for the documentary and heavily promoted it — so I was sure it’d be another shill-fest.

But The Highest of Stakes is no promotion of Hex. Essentially, it’s a 90-minute version of the scene from The Big Short where Mark Baum asks, “Why are [the mortgage brokers] confessing?” and his coworkers say, “They’re not… they’re bragging.”

The Highest of Stakes and the madness of crowds

The Highest of Stakes opens with investors describing Heart as a “god,” “messiah,” and “benevolent king.” Heart sits down and joyously lists off his assets.

“$10 million in cars, $3 million in watches… and the world’s biggest diamond,” he says (and will repeat at least three times over the course of the film).

In the introduction, the audience is led to believe that they’re simply watching a film about a cult. But the deep realities of Hex appear after the initial round of adoration. First we meet RG3, a self-proclaimed ‘Hexican’ who quits his job by saying something along the lines of “Basically, buddy, I’m the richest man you’ve ever known.”

But RG3 doesn’t want to hoard his brilliant investment. He has to try to help his friends get as wealthy as he is (on paper). So, he ropes in his buddy Mikey.

Read more: Richard Heart’s Pulse launch flops, users stranded, HEX crashes

Mikey states from the get go that he trusts RG3 so much that he’ll often invest in projects “without really knowing what [they are].” He’s married to a really smart woman named Ramey. Besides showing devotion to her family and being a responsible parent, she also seems to be aware that the cryptocurrency industry is a minefield of scams and hustlers.

RG3 and Mikey fully trust Heart but Ramey isn’t even on the fence: she wants nothing to do with Hex. Despite his wife’s protestations, Mikey dumps their entire life savings into the project.

“I bought some [Hex] this morning,” he tells Ramey.

Smiling, she says, “Like a little bit? Not a lot?”

“Yeah, just a little bit.”

“Like how much?”

Exasperated, Mikey says, “Like, I put all of [our house money] in.”

Ramey stops smiling.

A train wreck you can’t look away from

The majority of the film is consumed with two dueling narratives: one is that every financial product boils down to a ponzi scheme, with Richard Heart as the shining example in crypto. The other narrative is that Heart has built a cult of personality on the blockchain based on “number go up” despite no real-world product or use case and is doomed to fail.

Neither of these narratives are particularly compelling. Unfortunately, this means most of the film revolves around the unlikable Richard Heart and two professors, Dr. Kelly Richmond Pope and Dr. Lamont Black, who are keen to look into Hex as a scam but are far too medical in their approach.

Heart perfectly portrays the obscene centimillionaire jerk, but the two pushy professors constantly saying they “don’t get it” is repetitive and doesn’t offer a fair representation of the high quality and intense personalities of some of the strongest Hex opponents, such as Eric Wall. He makes a brief yet memorable cameo saying, “Sorry, Richard, this is the dumbest f*cking thing I’ve ever heard in my entire life.”

Thankfully, even without a proper hero, the villain of Richard Heart is enough to save the reality of the situation.

Hypocrisy and Down Only

Richard Heart is a Louis Vuitton duffle bag of hypocrisy. Scammers will tell you to trust them, he’ll say, and follow it unironically with, “Trust me.”

“I want to be loved,” he says, then admits that obnoxiously flaunting his wealth is how he attracts attention. He attacks the current system, then builds something he claims is an identical product but, ya know, better.

There is a telling moment early in The Highest of Stakes where RG3 says, “Hex is the first real cryptocurrency that actually does something: generates yield.” Generating yield isn’t something you can just do — it comes at a price, always.

Bonds, stocks, and certificates of deposits depend on certain investments, parameters, and market conditions — companies and governments providing real value. Thinking that magically generating yield provides a service is about as uninformed as it gets, and provides the backdrop for why Hex is more than a cult or a multi-level marketing scheme — it’s both.

Read more: SEC charges Richard Heart and PulseChain with civil fraud

This proves to be true in the film. RG3 has to deal with financial difficulties after telling his boss to eat dirt, Mikey literally bought the top and then lost even more money on ‘Pulsechain,’ and Heart looks like little more than an MLM slanging scammer. Hex and PulseChain remain on a downtrend.

Near the end of the film, Mikey’s wife Ramey laughs sadly into the camera and says, “At least I get to be right. How often is the wife right?”

I wish I could let Ramey know she’s been right all along.

The Highest of Stakes encapsulates crypto perfectly

Unlike my previous columns, titled So you don’t have to, the goal of this review isn’t to dissuade anyone from viewing The Highest of Stakes. I think this is a film — a documentation of our time — that is actually worth viewing.

I deeply disagree with the vague conclusion of the film, which avoided taking a stance and tried to leave a “what will happen next?” question hanging at the end. But attempts at neutrality fail in the wake of Heart’s off-putting personality and slew of hypocrisies.

The Highest of Stakes did a fantastic job of showing the insanity of the crypto industry, the narcissism of some of those most entrenched, and why everyone needs to be careful when dipping their toes into the speculative craziness that is cryptocurrency.

Go watch it.

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The post The Highest of Stakes with Richard Heart encapsulates the narcissism of crypto appeared first on Protos.

The Securities and Exchange Commission (SEC) is suing Richard Heart and PulseChain for civil fraud. According to the SEC, Heart, PulseX, and PulseChain also committed a variety of legal violations, including offering unregistered securities to US investors.

According to the SEC, Heart’s three crypto assets — Hex (HEX), PulseChain (PLS), and PulseX (PLSX) — were and are unregistered securities.

The SEC says that Heart controls these three “unincorporated entities.” Through these projects, Heart notionally raised more than $1 billion worth of crypto assets from investors.

For years, Heart has operated these entities while globe-trotting to avoid legal service. Indeed, lately, he’s been hiding out in Finland. However, according to the SEC, his claims to be outside of US jurisdiction failed when he offered HEX, PLS, and PLSX to US investors.

Moreover, his transactions occurred on Uniswap, the developers of which work at a headquarters in Brooklyn, New York.

Validates Protos’ coverage of Richard Heart and the SEC

Protos has reported on Heart (real name, Richard Schueler) during the past year, starting with one of the most definitive historical accounts of Hex, the lengthy delays of Pulse, and the disappointing launch of PulseX. As of today, the SEC alleges that Heart and PulseChain defrauded investors by misappropriating funds, which is a civil fraud charge.

Read more: Richard Heart followers lose faith as PulseChain, PulseX face delays

The SEC’s legal complaint provides details on Heart’s ETH– and HEX–recycling transactions “that enabled Heart to surreptitiously gain control of more Hex tokens.” Specifically, the SEC alleges that between December 2019 and November 2020, Heart’s Hex public wallet address received 2.3 million ETH (then worth $678 million). However, 94-97% of these ETH deposits were “recycling” transactions directed by Heart or other insiders.

Attorney Jason Seibert comments on suit

Attorney Jason Seibert said today on a Twitter Space: “As we pointed out nearly four years ago on Tone Vays’ 2019 Bitcoin Law Review, it was ridiculous that Richard Heart claimed his offering was not a securities offering… Heart was saying HEX is a certificate of deposit but yet it’s somehow not a security.

“When we asked him point-blank who was behind the Origin Address, he said he wasn’t going to say and would never say, because he did not want to run afoul of the SEC’s Howey Test. To me, that was prima facie evidence of an unregistered offering on nearly day one. He basically admitted to violations on day one.”

Someone in the audience asked Seibert about a possible criminal charge against Heart. He replied, “the DoJ is happy to let the SEC do discovery, do their work, get something first on the civil side, which then creates a basis for the possible arrest warrant in the future.” According to Seibert, this civil filing could possibly lead to a felony charge against Heart.

Heart is also the subject of an upcoming documentary movie called The Highest of Stakes which is scheduled to premiere in Miami this week.

Read more: Richard Heart’s Pulse launch flops, users stranded, HEX crashes

On another Twitter Space, Heart’s one-time friend turned critic Eric Wall said, “Hex was never listed on major crypto exchanges because, when those exchanges would check for ownership stats, they would find that Richard owned almost all of the supply.

“That made it so that Hex was basically only listed on Uniswap. Hex was a ‘pioneer’ of DeFi because Richard had no other choice. So, it’s not insane to me that Richard was able to spin up this cult. He has literally read books on how to create cults. I think it’s called The 48 Laws of Power.

“That book outlines these things he did, like sacrifices, adorning himself in jewelry, claiming to be a self-made millionaire, and always claiming the source of his wealth came from elsewhere. Richard applied the lessons from that book almost verbatim. His personality and charisma fit a cult perfectly.”

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Edit 18:20 UTC, Aug 1: The article originally stated that Richard Heart had personally funded an upcoming documentary about himself. However, the film is, in fact, funded by private investment.

The post SEC charges Richard Heart and PulseChain with civil fraud appeared first on Protos.