- The SEC filed a complaint against Heart in July.
- Serving Heart with court papers has proven tricky.
- The SEC opted to serve Heart via “Substitute Service” to keep the case on track.
The US Securities Exchange Commission (SEC) alleged that Richard Heart is responsible for perpetrating unregistered securities offerings via his Hex, PulseChain, and PulseX blockchains. Reports indicate that Heart had evaded service of the complaint, but a recent SEC court filing confirmed that he was ultimately served in Finland.
SEC Finally Serves Heart
Although the SEC filed its initial court complaint in July, serving Heart with legal papers has proven tricky, with multiple rumors alleging he had deliberately sought to evade contact with the securities agency.
However, the SEC filed an update on December 11 stating that Heart was served under Finnish law and the rules governing civil and commercial matters under the Hague Convention on October 31 by “Substitute Service.”
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Substitute service refers to delivering the defendant a copy of the complaint where “personal service” is impossible. This could take the form of leaving a copy of the complaint at the defendant’s property or via email. This enables the legal process to continue, even if the defendant deliberately avoids personal service.
An SEC exhibit supporting the December 11 filing detailed the numerous unsuccessful attempts to deliver personal service of the court documents, including leaving a contact request form on two occasions and no response to phone and text messages. Under substitute service, the court documents were left at a nearby police station, with Heart notified of the location of the documents.
As the court papers are now considered served, the SEC’s case against Heart can proceed.
Securities Offerings
The SEC’s case against Heart centers on allegations that he perpetrated fraud by marketing Hex, PulseChain, and PulseX as profit-generating investments without proper disclosures or securities registration, raising over $1 billion through the offerings.
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The complaint raised several other issues, including claims that Hex could generate investors a 10,000x return on their investment, using investors’ funds to create fake volume, and the misappropriation of $12 million to buy luxury items like expensive watches and cars.
The SEC seeks disgorgement of ill-gotten gains, civil penalties, and permanent injunctions against Heart and his companies, prohibiting further violations of securities laws.
On the Flipside
- The HEX, PulseChain, and PulseX tokens are down 99.1%, 83.5%, and 90.3%, respectively, from their all-time highs.
- Heart has a strong social media presence, and some followers continue advocating for him and his projects.
- Heart’s recent Twitter posts do not acknowledge the SEC’s court action.
Why This Matters
Even if founders believe their crypto projects are not securities and are fully decentralized, the economic realities determining investor profit may still render them securities under US law.
Read more about Richard Heart’s lavish spending here:
Richard Heart’s [Alleged] Scam Activity Involves World’s Largest Diamond
Find out what analysts say about the recent Bitcoin sell-off here:
Bitcoin Sell-Off Played Down as Healthy Correction
