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.

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.

Fans of Richard Heart awaited the launch of his magnum opus, Pulse, with bated breath. They forgave HEX for languishing 80% below all-time highs — or worse — while they waited. They forgave months of delays, SEC subpoenas, and hundreds of millions of dollars worth of inaccessible funds.

Finally, after four testnets and inexplicable postponement, Heart’s blockchain and its DEX activated mainnet on May 13. A bridge to other blockchains went live two days later.

The chart of Heart’s first project HEX illustrates the “sell the news” dump of Pulse. In Wall Street parlance, sophisticated traders buy amid rumors and sell into retail buying on the day of the news — hence the adage, sell the news.

From May 1 through May 22, neither PulseChain (PLS) nor PulseX (PLSX) had any major exchange listing. HEX was the only asset of Richard’s three tokens with liquid, independent price discovery. HEX is therefore the best measure of the value of Heart’s empire.

To that end, consider the price of HEX.

• On May 11, HEX rallied to a 52-week high of $0.08 per token amid rumors of an imminent Pulse mainnet activation.
• Its market capitalization crested at $13 billion.
• By launch time on May 13, HEX had lost one-third of its value to approximately $0.05 per token — just shy of a $10 billion market cap.

Then, on launch day itself, everyone realized the party was over. Smart money had already sold the news. HEX halved within 24 hours to $5 billion. In subsequent days, HEX has continued to sell-off and now trades below $0.02 per token around its 52-week low market cap of $2.2 billion.

Barrage of gas fees and slippage slams HEX fans

The point of Pulsechain (a fork of Ethereum) and its on-chain exchange, PulseX (a fork of Uniswap), was to reduce fees. However, most fees haven’t reduced at all.

Gas fees for a full sequence of transactions using Pulse are prohibitively expensive, with documentation and how-to guides in disarray. Would-be Pulse users need to pay gas fees for:

• Bridging assets onto Pulsechain, 
• Activating multiple DEX trading pairs on Pulsechain,
• Swapping non-Pulsechain tokens into Pulsechain tokens (plus MEV and slippage),
• Providing and removing liquidity (plus impermanent loss),
• Trading on Pulsechain (plus MEV and slippage), 
• Swapping Pulsechain tokens into bridgeable assets (plus MEV and slippage), and
• Finally, another suite of gas fees for transferring the bridgeable assets back to the original blockchain.

Heart waves away focus from these inundating fees with disingenuous promises about Pulsechain being “150X cheaper” than Ethereum. In reality, most PulseX users are stranded at best or underwater at worst. 

Pulse sacrificers: Locked and losing

For instance, consider sacrificers just for PulseX who finally received their mainnet PLSX on May 13. Prior to May 23, there was no exchange for these users to acquire PLS for gas fees to move their PLSX tokens. In actual effect, therefore, all of their funds remain immovable.

Sniffing an opportunity for easy money, an opaque network of over-the-counter dealers set up price-gouging offers, charging users prices like $0.10 for PLS despite its actual value being 99.9% cheaper. Some scammed users out of funds by promising to send PLS in exchange for assets that they simply stole. Faucets tried to give away PLS and immediately depleted amid the chaos. 

The public slowly learned the stark reality. The value of HEX and PLSX crashed relentlessly.

Today, PLS has retained some value, but mostly because gas-starved PLSX users have millions of dollars worth of locked funds that require PLS in order to sell. The bid of stranded PLSX users is one of the few sources of PLS demand — and the bid mostly exists so that they can sell.

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

Fake Pulse and price-gouging OTC dealers

Of course, PLSX users encounter an infuriating sequence of gas fees for each step of their attempts to sell. Consider the above, typical PLSX tokenholder. Prior to May 23, they might have attempted to buy PLS over-the-counter at a rate like $0.10. Even if they bought $200 worth of PLS, they would have received less than $1 worth of PLS after its fair revaluation from $0.10 to $0.0002. Not enough gas even for a single swap.

If the user managed to find a cheaper venue for buying even more PLS, they might have been able to buy a PLS-lookalike — but likely the wrong type. There are dozens of fake versions of PLS. Comically, even the official Pulsechain bridge doesn’t output native PLS. Scores of PLSX users have wasted money trying to buy the wrong type of PLS — or real PLS at price-gouged rates.

Once a dwindling minority of lucky users managed to find enough PLS to conduct all of the on-chain steps required to actually sell their PLSX (see the above barrage of bullet points), they find limited liquidity, massive slippage, and little support.

In short, the patience of Heart’s fans is running thin. His flagship project, HEX, is trading near 52-week lows. Many questions remain regarding his sales of the funds that he raised during the launch of HEX, Pulse, and PulseX. This collateral — mostly ETH and stablecoins — is one of the few things left backing confidence in his schemes.

Selling the collateral but not HEX, Pulse, or PulseX directly

HEX is trading near 52-week lows. PLSX has no major exchange listings. PLS trades on just two exchanges at prices below $0.0002.

In the opinion of Tone Vays, the real source of Richard Heart’s wealth is not any of these three tokens at all. Instead, Vays believes that Richard sells the ETH and other assets raised during the launch of these projects.

“He dumped all the Ethereum that people paid on day one to get his coins,” Vays said. 

Heart responded to that claim, “No comment, Tone. I got a lot of really cool stuff. I’m selling something for it, ain’t I?”

Indeed, Richard might never need to sell any meaningful amount of HEX, PLS, or PLSX. If he has sold the ETH, stablecoins, or other collateral backing those tokens, those sales would have made him a multi-millionaire. Even better for his brand, he could honestly claim to have never sold any of his projects’ tokens directly.

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The post Richard Heart’s Pulse launch flops, users stranded, HEX crashes appeared first on Protos.