The Securities and Exchange Commission continued its broadside against the crypto industry on Monday when it sued Richard Schueler (who goes by Richard Heart) and his crypto projects—Hex, PulseChain, and PulseX—for allegedly raising more than $1 billion by offering unregistered securities.
In the lawsuit, the SEC alleges Schueler used at least $12 million of the proceeds to buy himself a suite of luxury goods: nearly $7.2 million worth of luxury cars and watches, including a 2020 white Ferrari Roma and a Rolex Daytona Eye of the Tiger, and almost $5 million paid to Sotheby’s for “The Enigma,” a 555-carat black diamond said to be the largest in the world.
“Heart called on investors to buy crypto asset securities in offerings that he failed to register. He then defrauded those investors by spending some of their crypto assets on exorbitant luxury goods,” Eric Werner, director of the SEC’s Fort Worth office, said in a statement. “This action seeks to protect the investing public and hold Heart accountable.”
Heart did not immediately respond to a request for comment when contacted by Fortune on Twitter. “The things that I’m designing are designed to be the pinnacle of their field,” he said in a video posted to his website.
A YouTube streamer and crypto personality, Heart began marketing Hex in 2018, according to the SEC, claiming that it was the first high-yield “blockchain certificate of deposit.” He engaged in three separate offerings of “crypto asset securities,” the SEC alleges, one for Hex, one for PulseChain—what Heart said was a layer-1 fork of Ethereum—and then another for PulseX, a DeFi protocol. HEX, PLS, and PLSX, respectively, were the associated tokens.
The action against Heart and his crypto projects follows a series of blockbuster lawsuits from the agency against much larger firms and industry players.
After the collapse of FTX in November, the SEC has sued Gemini, Genesis, Bittrex, Tron, and the company behind TerraUSD, among others. The federal government has also targeted the biggest names in the industry, with lawsuits against Coinbase, the largest U.S.-based crypto exchange, and Binance, the largest in the world.
