Breaking: HEX Token Plummets 25% Following SEC Lawsuit Against Founder Richard Heart
July 31 2023 - 10:20AM
NEWSBTC
The U.S. Securities and Exchange Commission (SEC) filed a lawsuit
against Richard “Heart” Schueler and crypto projects HEX,
PULSECHAIN, and PULSEX. According to a document filed with a court
for the Eastern District of New York and shared on X by economist
Alex Krüeger, the regulator is violating U.S. securities laws.
Related Reading: Is Another Bitcoin Rally Coming Soon? This Pattern
May Say So As of this writing, HEX is feeling the heat from the
lawsuit. The token plummeted over 11% in today’s trade session
alone as a direct impact of this development. It continues a
downside trend that worsened over the past two weeks when the
cryptocurrency saw a 23% loss. SEC Fails With XRP But Goes After
HEX Per the document, the regulator claims that Richard Heart
raised over $1 billion by allegedly offering unregistered security,
the token HEX. The crypto founder supposedly offered the token in
December 2019 and for the following three years to “retail
investors in the U.S. and abroad.” The SEC claims that Heart
operates via PulseChain and PulseX, part of the scheme that
allegedly allows him to raise $1 billion from investors. Via these
platforms, the regulator argues, Heart made “grandiose” promises of
wealth to his investors. Furthermore, the Commission claims that
while Heart publicly spoke about supporting free speech, he
supposedly purchased “luxury goods” by taking money from his
investors. In that sense, the SEC claims that the crypto investor
misappropriated his investors’ assets and allegedly defrauded
investors. The regulator placed a special focus on HEX’s staking
mechanism, its “locked up” periods, and how Heart allegedly
manipulated the token’s supply by “recycling transactions.” The
document stated: Between December 2019 and November 2020, Heart,
via the Hex public wallet address, accepted more than 2.3 million
ether (“ETH”), putatively from investors, worth more than $678
million at the time of deposits (…). It appears that 94-97% of
these ETH deposits, however, were “recycling” transactions directed
by Heart or other insiders, which enabled Heart or other insiders
to gain control of a large number of Hex tokens (…). Consensus In
The Crypto Community The U.S. SEC is coming out of a major loss
after a court ruled out against their claims in the case versus
payment company Ripple and its executives. The regulator stated
that the company offered unregistered securities. However, unlike
the Ripple and XRP case, the crypto community is taking the SEC’s
side and believes the regulator is on the right track. Heart has
been a controversial figure for years in the nascent industry.
Bloomberg Intelligence’s James Seyffart stated the following
regarding the case: I may have been cheering for ripple to win
their case despite not really liking the project (and honestly
thinking it had many security-like traits). But I will be 100% pro
SEC in this case. This is the type of project the SEC should have
gone after years ago. Related Reading: Dogecoin Price Prospects:
Can The Memecoin Climb To The $0.1 Level? It remains to be seen if
the regulator will score another negative result, but many in the
crypto community are siding with the SEC. Cover image from
Unsplash, chart from Tradingview
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