Richard Heart, the billionaire founder of HEX and PulseChain, is being sued by the SEC for securities fraud.

Richard Heart, the billionaire founder of HEX and PulseChain, is being sued by the SEC for securities fraud.

The Rise and Fall of Richard Heart: A Deep Dive into the Blockchain Industry

SEC Building SEC Building / Source: Adobe

The blockchain industry has been marred by controversies and legal battles, and the recent case involving Richard Heart, a prominent internet marketer and crypto advocate, is no exception. The US Securities and Exchange Commission (SEC) has taken legal action against Heart, accusing him of raising over $1 billion through unregistered securities offerings and defrauding investors. These allegations shed light on the challenges and risks that exist within the blockchain industry.

Heart is primarily known for his involvement in projects such as Hex, PulseChain, and PulseX. Hex is an ERC-20 token marketed as the first blockchain certificate of deposit, while PulseChain is a layer-1 blockchain, and PulseX is a PulseChain-based decentralized exchange (DEX). Despite the ambitious goals attached to these projects, the SEC alleges that Heart used investor funds for personal purchases, undermining trust and legality. This case brings to the forefront the importance of regulatory compliance and ethical conduct within the blockchain industry.

Pathway to Grandiose Wealth

The SEC’s lawsuit against Heart revealed that he positioned his investments as a pathway to “grandiose wealth.” Heart made audacious claims, promising that Hex would become “the highest appreciating asset that has ever existed in the history of man.” He went on to admit that the success or failure of these ventures rested solely on his efforts. Such inflated promises and personal guarantees are red flags that often indicate potential securities violations.

When determining whether an asset is a security or not, the SEC often refers to the “howey test.” This test defines an investment contract (security) as existing when there is an “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.” Heart’s promises and personal involvement in the success of his projects align with the criteria set by the howey test.

$12.1 Million in Misappropriated Funds

The SEC’s investigation into Heart’s activities also uncovered the alleged misappropriation of at least $12.1 million of PulseChain investor funds for personal luxury purchases. These indulgences range from acquiring a 555-carat black diamond to multiple high-end automobiles and expensive watches. Heart’s actions not only raise concerns regarding the misuse of investor funds but also violate federal securities laws by diverting resources intended for project development towards personal expenditures.

As a consequence of his alleged misconduct, the SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. This legal action against Heart is part of the SEC’s broader initiative to bring the crypto industry into compliance with securities laws. The regulatory crackdown on cryptocurrency-related ventures aims to establish a clear framework for investor protection and market stability.

Things Go From Bad to Worse for HEX, PLS, PLSX

Even before the SEC’s lawsuit, Heart’s projects faced significant challenges and setbacks. Issues such as liquidity problems, high fees, and exploitable bugs plagued Hex, PulseChain, and PulseX shortly after their launch. As a result, the tokens associated with these projects experienced dramatic declines in value. HEX, PLS, and PLSX were all down 99%, 87%, and 97%, respectively, from their all-time highs.

In an unfortunate turn of events, these cryptocurrencies experienced further declines on Monday. HEX plunged an additional 30%, reaching its lowest level since December 2020, while PLS dropped over 40% to approach record lows. PLSX was hit the hardest, plummeting nearly 50% to its lowest level since its launch in May. These sharp declines highlight the volatility and risk inherent in the crypto market, and the challenges faced by projects that fail to deliver on their promises.


The case of Richard Heart and his projects Hex, PulseChain, and PulseX serves as a cautionary tale for the blockchain industry. It underscores the importance of regulatory compliance, transparency, and ethical behavior in the pursuit of blockchain innovation. The SEC’s legal actions against Heart and its ongoing efforts to bring the crypto industry under its purview show the need for clear guidelines and accountability within the industry.

As the blockchain industry continues to evolve, it is crucial for project leaders, investors, and regulators to work together to foster a secure and sustainable ecosystem. Transparency, accountability, and adherence to regulatory standards will not only protect investors but also promote trust and confidence in blockchain technology. By learning from cases like Richard Heart’s, the industry can grow stronger and ensure that innovation aligns with legal and ethical standards.