In its filing to the United States District Court for the Eastern District of New York, the SEC alleges that Richard Heart and his projects, including Hex, PulseChain, and PulseX, have violated Section 5 of the Securities Act of 1933. This law includes the fundamental provisions for the registration and regulation of securities, and it’s alleged that Heart and his projects have breached these provisions.
Among the main points of accusation against Heart are the allegations of violating securities laws by illicitly inflating the price of the token and embezzlement of investor assets. According to these allegations, Heart used a series of illegal strategies to inflate the price of the Hex token, of which he is the creator, thus violating securities laws.
However, the illegal activities don’t end there. The SEC also alleges that Heart has embezzled investor assets and used these funds for personal luxury expenditures.
”The SEC also charged Heart and PulseChain with fraud for misappropriating at least $12 million of offering proceeds to purchase luxury goods including sports cars, watches, and a 555-carat black diamond known as ‘The Enigma’ – reportedly the largest black diamond in the world.”sec.gov
Transactions on Uniswap
Another significant part of the SEC’s accusations against Heart and his companies is that most of the transactions occurred on Uniswap, a decentralized crypto asset trading platform based in Brooklyn, as per The Block.
Uniswap is indicated as the platform where PulseX was specifically designed.
For this reason, the SEC chose the Eastern District of New York as the appropriate venue for the lawsuit. A portion of the complaint states, “The venue is suitable for this District because most of the crypto asset transactions described here took place on Uniswap, a decentralized crypto asset trading platform with developers based in Brooklyn. Heart specifically designed PulseX as a fork of Uniswap.”
The SEC’s filing also provides information on the measures to be taken during the lawsuit process and the compensation demanded. The complaint file requests the application of precautionary measures, the recoupment of unjust gains, the collection of pre-determined judgment interest, the imposition of monetary penalties, and the provision of other equitable compensations.
The SEC also reported that the ongoing investigation is being conducted by Jaime Marinaro and Derek Kleinmann from the Fort Worth Regional Office, with the assistance of Jamie Haussecker.