SEC v. Richard J. Schueler; Richard Heart; Hex; PulseChain; and PulseX, No. 1:23-cv-5749, Eastern District of New York (July 31, 2023) — Complaint

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NEW YORK
________________________________________________
        )
SECURITIES AND EXCHANGE COMMISSION, )
        )
 Plaintiff,      )
        ) Civil Action No.:1:23-cv-5749
v.        )
        ) JURY TRIAL DEMANDED
RICHARD J. SCHUELER, a/k/a RICHARD HEART,   )
HEX,         )
PULSECHAIN, and      )
PULSEX,        )
        )
Defendants.          )
________________________________________________)

COMPLAINT

Plaintiff Securities and Exchange Commission (the “Commission” or “SEC”) alleges:
SUMMARY OF THE ACTION
1. Richard  Schueler,  also  known  as  Richard  Heart  (“Heart”),  is  an  American-born
Internet  marketer,  content  creator,  and  serial entrepreneur  living  in  Finland.    Heart  operates
through  three  unincorporated  alter-ego  entities,  Hex,  PulseChain,  and  PulseX.   Beginning  in
December 2019, and continuing for at least the next three years, Heart raised more than $1 billion
in the unregistered offer and sale of crypto asset securities to retail investors in the U.S. and abroad.
Heart engaged in three separate offerings: Hex, PulseChain, and PulseX.    Each was, and is, a crypto
asset security, and PulseChain and PulseX are crypto asset security platforms designed, created,
and maintained by Heart.  Heart continually touted these investments as a pathway to grandiose
wealth for investors, claiming that Hex, for example, “ was built to be the highest appreciating asset
that  has  ever  existed  in  the  history  of  man.”    Heart  hired and  directed  developers  to  build  and
maintain  the  software  framework  to  support  Hex,  PulseChain,  and  PulseX.    Although Heart

2

claimed these  investments  were  for  the  vague purpose  of  supporting  free  speech,  he  did  not
disclose  that  he  used  millions  of  dollars  of  PulseChain  investor  funds  to  buy  luxury  goods  for
himself.    Heart,  Hex,  PulseChain,  and  PulseX  violated  the  federal  securities  laws  through  the
unregistered offer and sale of securities.  Additionally, through the misappropriation of investor
assets, Heart and PulseChain defrauded their investors.
2.  Beginning  in  December  2019,  Heart offered  and  sold  Hex  tokens,  promising
investors many incentives and bonuses, while marketing Hex as the first high-yield “Blockchain
Certificate  of  Deposit”  launched  on  the  Ethereum  network.    Additionally, Heart  touted  a  Hex
feature that he developed and dubbed “staking,” which he described as allowing Hex investors to
lock up their Hex tokens for a designated period of time in return for additional Hex tokens at the
end  of  their  lock-up  period.    Heart  claimed  that  investors  who  participated  in  the  so-called
“staking” of Hex tokens could earn an average of 38% annual return in the form of additional Hex
tokens.
3. 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.  In exchange for their investment, Heart issued Hex tokens to
investors.  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,  while  creating  the  false  impression  of  significant  trading  volume  and
organic demand for Hex tokens.
4. Between  July  2021  and  April 2022,  Heart  conducted  additional  unregistered
offerings of  investments  he  developed  called  PulseChain (offering  “PLS”  tokens)  and  PulseX
(offering “PLSX” tokens).  For both the PulseChain and PulseX offerings, Heart urged investors

3

to invest by depositing their crypto assets to the PulseChain and PulseX public wallet addresses in
exchange for a promise to deliver PLS and PLSX tokens in the future.
5. Investors invested more than $354 million by depositing their crypto assets to the
PulseChain public wallet address in exchange for the promise of future delivery of PLS tokens.  In
connection  with  PulseX,  investors invested more  than  $676  million by  depositing  their  crypto
assets to the PulseX public wallet address in exchange for the promise of future delivery of PLSX
tokens.
6. Heart is familiar with the U.S. securities laws and the test (established in SEC  v.
W.J. Howey Co., 328 U.S. 293 (1946)) for determining what is and is not a security, specifically.
So he frequently makes veiled references about why investors can expect profits while also making
tongue-in-cheek  disavowals.    But  his  efforts  to  obfuscate  are  unavailing.     Each  of  the  Hex,
PulseChain, and PulseX offerings involved investments of money in common enterprises with the
reasonable expectation of profits to be derived based on the efforts of others.  Accordingly, the
Hex, PulseChain, and PulseX offerings were securities offerings.  At no time did Heart (or anyone
else  associated  with  these  offerings)  register  the  Hex,  PulseChain,  or  PulseX  offerings  with  the
Commission.
7. Additionally, Heart and  PulseChain  defrauded  investors  by  misappropriating  at
least $12.1 million of PulseChain investor funds.  Instead of using these investor funds to develop
and market the PulseChain network, or even to fulfill Heart’s explicit statement that invested funds
supported “freedom of speech,” Heart and PulseChain used at least $12.1 million of investor funds
for Heart’s personal  luxury  purchases,  including a  555-carat  diamond,  expensive watches,  and
high-end automobiles.

4

8. Through  their  actions,  Defendants  Heart  and  PulseChain  violated,  and  unless
enjoined will continue to violate, the antifraud provisions of the federal securities laws, namely
Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and
Rules 10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)] and Sections 17(a)(1) and
(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(1) and (3)].
9.  Additionally, through their actions, all Defendants violated, and unless enjoined
will continue to violate, the securities-registration provisions of the federal securities laws,
namely Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)].
10. To protect the public from further harm and fraudulent activity, the SEC brings this
action against Defendants and seeks: (i) permanent injunctive relief; (ii) disgorgement of ill-gotten
gains, plus prejudgment interest; and (iii) civil penalties.
DEFENDANTS
11. Richard J. Schueler,  a/k/a  Richard  Heart,  age  43,  is  a  U.S.  citizen  who,  upon
information  and  belief,  currently resides  in  Helsinki,  Finland.    He  is  the  founder  of  Hex,
PulseChain, and PulseX.
12. Hex is an ERC-20
1
 token and an unincorporated entity established by Heart, which
serves as an alter-ego entity for Heart.  Heart operates Hex’s websites at hex.com, hex.win, and
ethhex.com.    Offerings  for  and  sales  of  Hex or Hex  tokens  have  not been  registered  with  the
Commission.
13. PulseChain  purports  to  be  an Ethereum fork and  layer-1  blockchain  that  Heart
released on May 12, 2023.  PulseChain is an unincorporated entity established by Heart that serves
as an alter-ego entity for Heart.  Heart operates PulseChain’s website at pulsechain.com.  Pulse

1
 ERC-20 is a technical standard that defines how so-called “fungible tokens” operate on the Ethereum blockchains.

5

(PLS) is the native token for PulseChain.  Offerings   for and sales of PulseChain and PLS tokens
have not been registered with the Commission.
14. PulseX is a self-described decentralized protocol on the Ethereum blockchain that
Heart developed to serve as PulseChain’s so-called decentralized crypto asset trading platform
through a fork of the Uniswap platform.  Rather than employing a traditional order book and
matching engine to execute orders for securities, Uniswap’s core feature is an automated market
maker, a smart contract on the Ethereum blockchain that allows “liquidity providers” to pool
assets for sale and allows people to purchase those assets from the pools.  Heart deployed PulseX
on May 12, 2023.  PulseX is an unincorporated entity established by Heart that serves as an alter-
ego entity for Heart.  Heart also operates a website for PulseX at pulsex.com.  PulseX (PLSX) is
the native token for PulseX.  Offerings for and sales of PulseX and PLSX tokens have not been
registered with the Commission.
JURISDICTION AND VENUE
15. The  Commission  brings  this  action  pursuant  to  authority  conferred  upon  it  by
Sections 20(b) and 20(d) of the Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)] and Sections 21(d)
and 21(e) of the Exchange Act [15 U.S.C. §§ 78u(d) and 78u(e)].
16. This  Court  has  jurisdiction  over  this  action  pursuant  to  Section  22(a)  of  the
Securities  Act  [15  US.C.  §  77v(a)]  and  Sections  21(d),  21(e),  and  27  of  the  Exchange  Act  [15
U.S.C. §§ 78u(d), (e), and 78aa].
17. In connection with the conduct described in this Complaint, Defendants, directly or
indirectly, made use of the mails or the means or instruments of transportation or communication
in interstate commerce, including but not limited to email, wiring of funds, and use of brokerage
accounts.

6

18. Venue  is  proper  in  this  District because many  of  the  crypto  asset  transactions
described herein took place on Uniswap, a so-called decentralized crypto asset trading platform
whose developers are headquartered in Brooklyn.  Heart specifically designed PulseX as a fork of
Uniswap.  Additionally, at least one investor of PulseChain and PulseX resides in this District.
FACTUAL ALLEGATIONS
I. HEART
19. Richard  Heart  was  born  Richard  J. Schueler and  raised  in  Florida.    Heart  is  an
Internet marketer, and prolific content creator who claims to have founded and managed several
successful  Internet  startups,  including  a  business  he  claims  employed  150  people  and  had  $60
million in annual sales.
II. HEX
a. Heart’s Development and Promotion of Hex
20. Heart is the founder and creator of Hex and the Hex token, a crypto asset security
he designed to operate on the Ethereum network.  Heart has often touted Hex as the first high-yield
“Blockchain  Certificate  of  Deposit.”    Heart first  marketed  Hex to  public  investors  at  a  Crypto
Finance Live conference in November 2018—more than a year before his first sales of Hex tokens.
Heart was the sole promoter of Hex and appeared on several online platforms to promote it before
he launched the offering of Hex tokens.  Heart promoted Hex, the contract code,
2
 various incentive
and referral bonuses, and Hex’s so-called “staking” feature across multiple online and social media
platforms,  but  particularly  in  YouTube  livestream  videos.    Heart  continued  to  market  Hex
throughout  2019  and during  his  offer  and  sale  of  Hex  tokens,  which  commenced on  or  about
December 3, 2019 and continued through at least November 19, 2020 (the “Hex Offering”).

2
 Certain blockchains have the ability to run self-executing computer programs, known colloquially as “smart
contracts,” that perform certain functions when predetermined conditions are met.

7

i. Investors Reasonably Expected to Derive Profits from Hex Tokens

21. Hex investors could derive increased value by holding their Hex tokens and waiting
for them to appreciate based on principles of supply and demand, or by trading them, but Heart
designed Hex so that the tokens had an additional benefit—a so-called “staking” option that would
allow investors to lock up their Hex tokens in order to receive additional Hex tokens in the future,
depending on a number of factors, including the duration of the token holder’s so-called “stake.”
Hex’s so-called “staking” mechanism does not involve validating transactions on the blockchain.
On the Hex.com website, Heart analogized his so-called “staking” process to conventional interest
payments and investment returns.
22. Heart told potential investors on many occasions, including via several YouTube
livestreams,  that  Hex  investors  could  “stake” their  Hex  tokens  through  a  process  in  which  the
tokens are sent to the Ethereum blockchain’s genesis address.  That address has no “owner” and,
therefore, assets that are sent to it cannot be transferred out.  In exchange for investors locking up
their Hex tokens, Heart promised that the Hex smart contract would pay the investors   investment
returns   in the form of additional Hex tokens to be delivered in the future.  Heart has repeatedly
explained, including during a YouTube livestream interview in December 2019, that the purpose
of  this  form  of  purported  “staking”  was  to  incentivize  investors  to  lock  up their  Hex  tokens—
which reduced the number of Hex tokens in circulation—to drive up their price.  Heart and Hex
repeatedly advertised, including on Hex.com, social media, and in interviews, that investors would
receive an average investment return of 38% in exchange for so-called “staking” their Hex tokens.
23. Heart explained that this self-described “staking protocol”   benefited all holders of
Hex tokens by increasing the token price based on supply-and-demand principles.

8

ii. Heart Emphasized that Investors Would Profit from Hex Tokens

24. Heart has repeatedly made statements on Hex.com and social media that would lead
potential  investors  to  believe  that  they  would  profit  from  an  investment  in  Hex.    For  example,
Heart often promoted Hex on social media.  Leading up to the Hex Offering, Heart touted on a
November 8, 2019 YouTube livestream that, “if you want to get rich, [Hex is]   built for that,” a
refrain that he would repeat many times.
25. Heart pumped Hex’s capacity for investment gain, claiming at Hex.com (until at
least November 1, 2020) that, “Hex is designed to surpass ETH, which did 10,000x price in 2.5
years.  It’s working!  So far, HEX’s USD price went up 115x in 129 days.”  On December 2, 2019,
during  a seven-hour livestream on  YouTube  hours  before  the  Hex  Offering  commenced,  Heart
stated  that  Hex  “was  built  to  outperform  Ethereum  and  Bitcoin  and  all  other  cryptocurrencies.”
Heart added that “[Hex] was built to be the highest appreciating asset that has ever existed in the
history of man.  That’s the design intention.”
iii. Heart Personally Undertook Efforts He Claimed Would Make Hex Successful

26. From the outset, Heart controlled—and continues to control—nearly all aspects of
the Hex ecosystem.  In a November 17, 2019 livestream on YouTube, Heart shared with potential
investors “how-to” videos that he created to explain how investors could: (1) purchase Hex tokens
during the offering period, and (2) stake their Hex tokens.  In that livestream, Heart also shared
additional efforts he was undertaking, including the creation of more “walk through” videos and
“ringing  up  some  more  exchanges  and  whales  [he]  know[s]”  in  order  to  make  the  Hex  launch
successful.  In the   same video, Heart disclosed that he directed certain developers to work on the
Hex code to the extent that their work “benefit[ted] the ecosystem.”
27. In a   November 12, 2020 YouTube livestream, Heart was asked how much of his
time was going towards Hex;  Heart stated: “almost all of it.”  As recently as the January 2023 Hex

9

Conference (which was virtual, and available on YouTube), Heart stated regarding Hex, “I want
to be – I want to have the best performing asset that’s ever existed. I want to be the best crypto
founder that’s ever existed.  I like doing – I like owning the world’s largest diamond.  I like having
a coin that went up a million percent that’s had 3 years of flawless operation, that’s never been
hacked.  The front end has never gone down.”
28. In an earlier YouTube livestream on July 16, 2019, Heart admitted how important
his efforts were to ensuring that the Hex token, once launched, would be available for trading on
so-called crypto  asset  trading  platforms.    He  promised  that  he  was  “going  to  personally  call
everyone and see where [he] can get [Hex] listed.”  In fact, before the close of the Hex Offering,
Heart contacted representatives of a so-called crypto asset trading platform at least twice through
private  Twitter  messages.    In  those  messages,  Heart  discussed  the  potential  promotion  of  Hex
tokens on the platform through Twitter, and also commented on Hex being the number one volume
liquidity pool
3
 on the platform.   It appears that, on December 15, 2019, the platform began listing
Hex’s  tokens  on its so-called  decentralized  crypto  asset  trading  platform  as  a  result  of  Heart’s
direct efforts.
b. The Hex Offering
29. From December 3, 2019 through at least November 19, 2020 (the “Hex Offering
Period”), Hex and Heart offered and sold Hex tokens to investors in exchange for ETH.  As part
of the Hex Offering, Hex and Heart accepted investments of ETH from the public, including from
investors in the United States, and delivered Hex tokens in return.
30. During  the  Hex  Offering  Period,  investors  purchased  Hex  tokens  by  transferring
ETH  to  a  Hex  wallet  address  on  the  Ethereum  blockchain.    This  wallet  is  known  as  the  “Hex

3
 A liquidity pool is a collection of crypto assets grouped into a smart contract to facilitate trades on a blockchain
network.

10

contract  address”  (“Hex  CA”).    Heart   provided  the  Hex  CA  to  developers  so  that  it  would be
programmed  into  Hex’s  contract  code.   Initially,  investors  who  wanted  to  obtain  Hex  tokens
purchased  them  through  an  online  portal  called  the  “Adoption  Amplifier.”    Heart  designed,
controlled, and promoted the Adoption Amplifier to potential Hex investors, and Heart oversaw
the development of Hex’s code in its smart contract.
31. Heart publicly  claimed  that  he  relied  on  game  theory  in  designing  the  purchase
process for Hex tokens to reward larger, longer, and earlier investments.  For example, Hex and
Heart made available only a pre-determined number of Hex tokens for purchase each day.  For the
first  day  of  the  Hex  Offering  Period,  the  pre-determined  number  was  one  billion  Hex  tokens.
Investors who wanted to purchase Hex tokens sent their ETH to the Hex CA, and Hex tokens were
distributed to these investors based on: (1) how much total ETH the investors sent to the Hex CA
on that particular day, and (2) the pre-determined amount of Hex tokens that Heart and Hex made
available that day.
i. Heart Designed Incentives to Generate Investor Interest

32. During the Hex Offering Period, Heart designed and implemented many incentives
and bonuses to lure investors, including the promise of additional future Hex tokens.  For example,
Heart used bonus payments to encourage investors to increase their investments in order to make
profits  from the price appreciation that Heart told investors to expect.  Hex.com promoted the Hex
ecosystem and, at least through November 25, 2020, stated: “Hex aligns incentives, so the more
people that participate, the better everyone does.”

11

33. Heart conducted two separate airdrops
4
 during the Hex Offering Period to generate
additional  investor  interest  by  promoting Hex  to  the  broader  crypto  asset  market.     Via  these
airdrops, Heart directed Hex developers to deposit Hex tokens into a large number of wallets that
he identified as significant holders of Bitcoin, even though the people controlling those Bitcoin
wallets had not requested Hex tokens.  Heart orchestrated a similar airdrop on a later date to a list
of wallet addresses that Heart identified as large holders of ETH.  If those wallet holders accepted
the airdropped Hex tokens from Hex, Heart required that 90% of those Hex tokens be “staked” in
the process described in more detail in paragraphs 44-49 below.
ii. Heart Pooled Investor Funds

34. Heart conducted the Hex Offering worldwide, via the Internet, with no restrictions
on who could access the Hex.com and Hex.win websites.  During the Hex Offering, there were
more than 2,371,362 ETH deposits to the Hex CA, totaling approximately 1.3 million transactions.
These transactions can be traced to at least 21,156 identifiable wallet addresses, including wallet
addresses that belong to investors in the United States.
35. Upon receipt of ETH from investors, Hex and Heart pooled these investor crypto
assets  into  the  same  wallet  address:  the  Hex  CA.    Heart  specifically  directed  his  developers  to
program the Hex code to create the pooling of crypto assets received from investors.    Heart directed
that Hex’s code include a function that “flushed,” or automatically transferred, all of these pooled
investor crypto  assets  out  of  the  Hex  CA  to  a  separate  private  wallet  address  that  Heart  also
provided to the Hex developers.  This wallet address was referred to as the “Hex Flush Address.”

4
 In the crypto asset space, an airdrop typically refers to the distribution of crypto assets to certain recipients,
purportedly without requiring them to pay cash consideration to receive the asset.  On blockchains, typically a wallet
automatically receives crypto assets sent to it without the owner having to take any steps to accept that new asset.
Heart employed a variation on the typical airdrop, requiring a large portion of the tokens to be “staked.”

12

36. Before he began selling Hex tokens, Heart provided his developers with both the
Hex CA and the Hex Flush Address and instructed them on the flow of invested funds out of the
Hex CA and into the Hex Flush Address.  It appears that Heart owns and controls both the Hex
CA and the Hex Flush Address.
37. After the more than 2.3 million ETH (see Paragraph 34   above) was deposited to the
Hex CA and transferred to the Hex Flush Address, the ETH was subsequently sent on through a
number  of  transactions—typically  involving  a  series  of  intermediary  addresses—to  a  so-called
crypto asset trading platform.  Then, the ETH was sent back to the Hex CA through another series
of transactions involving intermediary addresses.  An analysis of these repetitive ETH transactions
into the Hex CA indicates that a pproximately 94-97% of the ETH deposited into the Hex CA was
recycled  through  the  so-called crypto  asset  trading  platform.    This  created  the  inaccurate
appearance that there was significant organic demand for Hex tokens.  The series of transactions
and the use of intermediaries obscured that 94-97% of ETH deposits was directed from the Hex
Flush Address back to the Hex CA as seemingly new investments by unrelated investors.
c. Hex and Heart Continued to Promote and Develop the Hex Ecosystem after
the Hex Offering
38. After the Hex Offering concluded in November 2020, Heart continued to engage in
extensive marketing efforts and social media campaigns to promote Hex, because Hex’s success
is,  and  has  been,  dependent  on  Heart’s  efforts  and  his  maintenance  of  the  Hex  ecosystem  and
secondary market demand.
39. After  the  Hex  Offering  concluded,  Hex  and  Heart  continued  to  make  public
statements extolling the value of Hex tokens.  For example, Hex’s website currently states:
• “Hex has already done a 10,000x in under 2 years . . .”;
• “The price of Hex appreciated faster than anything else”;

13

• “Hex’s price went up 1421x against Bitcoin and 361x against Ethereum”; and
• “Hex’s primary design intention is price appreciation . . .”
40. Similarly, after the  Hex  Offering  concluded,  Heart  continued  to  tout  to  investors
Hex’s so-called “staking”  feature  and  to develop  Hex’s  secondary  market,  including  through
multiple websites that he owns and controls, including Hex.com, hex.win, and Ethhex.com, and
on social media, including YouTube, Twitter, and Instagram.
41. Since the Hex Offering closed, Hex investors can only purchase Hex tokens from
third  parties  on  various  centralized  and  so-called  decentralized  crypto  asset  trading  platforms.
Heart’s entrepreneurial efforts continued as he instructed potential investors to do the following:
(1) download and install a crypto asset browser extension that allows investors to store and manage
their  investments  in  Hex  tokens;  (2)  purchase  ETH using  the  browser extension via  two  online
crypto asset trading platforms; (3) visit Ethhex.com, a domain that Heart  controls and pays for,
where  investors  are  further  directed  on  how  to  exchange their  ETH  for  Hex  tokens  sold  by
secondary market participants; and (4) “stake” their HEX tokens by visiting go.hex.com (which is
discussed further below in paragraphs 44-49).  Most secondary market transactions in Hex tokens
occur on Uniswap, a self-described decentralized crypto asset trading platform whose developers
are headquartered in Brooklyn.
42. In  a  continued  effort  to  build  the  Hex  ecosystem  and  sustain  a  market  for  the
exchange of Hex tokens, Heart developed Ethhex.com, a website interface that allows investors to
engage in secondary market purchases of Hex tokens directly through Uniswap.
43. As described in paragraph 72 below, Heart also touted to investors that the launch
of PulseChain and PulseX would lead to an increase in profits for Hex investors.

14

d. Heart Developed a So-called Staking Feature Designed to Deliver Additional
Profits to Investors
44. Leading up to, during, and after the Hex Offering Period, Heart heavily marketed
Hex’s alleged “staking” feature, which he designed.  In touting Hex’s so-called “staking” feature,
Heart frequently marketed Hex as the first high-interest or high-yield “Blockchain Certificate of
Deposit”  launched  on  the  Ethereum  network.    In  so  doing,  Heart  and  Hex  created  a reasonable
expectation of profits—independent of any effort by investors.
45. Heart  designed  the  so-called staking  feature  of  the  Hex  ecosystem  whereby  Hex
investors were, and are, encouraged to lock up their Hex tokens for a designated period of time in
exchange for the promise of receiving additional Hex tokens in the future, i.e., a return on their
investments.  Hex investors can lock up their Hex tokens for periods ranging from one day to 15
years through a software extension.  Hex investors purportedly lock up their Hex tokens by sending
them  to  the  Ethereum  blockchain’s  genesis  address.    In  the  Hex  ecosystem,  Heart’s  form  of
“staking” purportedly removes Hex  tokens  from  circulation  and thereby,  according  to  Heart,
increases the price of the Hex token based on general principles of supply and demand.
46. Based  on  several  factors,  including  the  length  of  time  that  a  Hex  investor  stakes
their  Hex  tokens,  Heart  programmed  the  Hex  smart  contract  to  pay  investors  new  Hex tokens,
amounting to the number of tokens the investor staked plus accrued “interest” (calculated daily,
but not paid out until the end of the lock-up period).  Heart has repeatedly claimed at Hex.com, in
online interviews, and on Twitter that Hex “stakers” will receive an average annual return of 38%
for their “stake.”  Heart has claimed on YouTube and Twitter that approximately ten percent of
Hex token holders have staked their Hex tokens.
47. During  the  Hex  Offering Period,  Heart  also  touted  a  rewards  program  called
“BigPayDay,”  in which he distributed   unclaimed Hex tokens, plus other types of bonuses at the

15

close of the offering, to investors who staked   their Hex tokens.  These unclaimed Hex tokens were
distributed to “stakers” based on the length of their lock-up period (with preference given to longer
periods) and the number of Hex tokens they “staked.”  On November 18, 2020, just before the Hex
Offering closed,  Hex  announced  that  the  Hex tokens  distributed  via  the  BigPayDay  event  were
worth at least $1 billion.
48. In a November 27, 2019 interview livestreamed on YouTube shortly before the Hex
Offering,  Heart  described  the  so-called  “staking”  feature  as  “virtual  lending”  within  the  Hex
ecosystem,  saying that, “when people stake their coins . . . the supply has reduced, which means
that everyone that hasn’t staked their coins just virtually borrowed the money. . . . If you’re holding
an unstaked Hex, every time someone else stakes the Hex, your Hex that you can trade and sell for
fiat, it goes up in value.”
49. Throughout the relevant time period, Heart has emphasized that the principles of
supply  and  demand  create  a  direct  relationship  between  the  number  of  “staked”  tokens  and  the
market value of Hex tokens.  For example, on December 2, 2019, Heart emphasized on YouTube
how  his  so-called  “staking”  program  would  benefit  all  Hex  token  holders:  “[b]ut  in  Hex,  when
people lock up their coins, and that is what caused the price to go up, then the market cap will go
down,  which  gives  you  more  room  to  grow  .  .  .  [a]nd  then  you  could  just  keep  building
appreciations and mad gains.”  The Hex.com website currently states that “by staking their Hex,
Stakers reduce the supply, which puts upwards pressure of Hex’s price.”
50. Neither Heart nor Hex has ever registered Hex tokens or the Hex Offering with the
Commission.

16

III. PulseChain
a. PulseChain Development and Offering
51. After  the  Hex  Offering  concluded  in  November  2020,  Heart  started  developing
PulseChain,  which  Heart  publicly claimed  would  be  a  fork  of  the  Ethereum  network.    The
PulseChain  website  (pulsechain.com),  which  Heart  controls,  describes  PulseChain  as  having
cheaper gas fees
5
 and being four times faster than the Ethereum network.  Between July 15, 2021
and August 3, 2021
6
 (the “PulseChain Offering Period”),  Heart orchestrated an offering to raise
investor  funds  to develop  PulseChain.  During  the  PulseChain  Offering  Period,  Heart  and
PulseChain  instructed  investors  to invest  in  PulseChain  by,  as  Heart  called  it,  “sacrificing”
(depositing)  various  forms  of  crypto  assets  (including ETH  and  others)  to  the  PulseChain
“sacrifice” address (“PulseChain SA”).  Through PulseChain’s website, Heart instructed investors
on how to “sacrifice” their crypto assets to purchase Pulse (“PLS”), PulseChain’s native token.
52. In  exchange  for  an investment  (a  deposit  of  crypto  assets),  Heart  promised  to
deliver PLS tokens to the investor in the future, tied to the amount of the  investor’s investment
(the  “PulseChain  Offering”).    Heart represented  that  the calculation  of  the  promised  number  of
PLS tokens to be delivered to an investor was based, in part, on: (a) the amount of the investor’s
investment (or “sacrifice”) of crypto assets,  and (b) how early in the PulseChain Offering Period
the investment took place.  As a result, Heart incentivized investors to invest in PulseChain early.
53. PLS tokens were delivered to investors on or about May 12, 2023, when PulseChain
was deployed publicly, or as Heart described, available on “main net.”

5
 A gas fee refers to the fee required to conduct transactions or execute contracts on the network.
6
 The PulseChain Offering Period was unofficially extended until at least approximately April 6, 2022 to allow
Heart to continue accepting investor assets.

17

54. According to Heart and PulseChain, because PLS tokens must be used for gas (or
transaction) fees on PulseChain, PLS investors could make a profit from that demand simply by
holding PLS.  Heart frequently stated that the purpose of PulseChain was to save Hex token holders
from the high gas fees they were being forced to pay for Hex transactions on Ethereum.  Upon
PulseChain’s  release,  PulseChain investors received  a  PulseChain-compatible  copy  of  all  their
Ethereum-network crypto assets through an “airdrop,” in addition to the newly issued PLS tokens
described above in paragraphs 51-53.
55. To  date,  more  than  59,000  deposits  to  the  PulseChain  SA  have  been  identified,
reflecting more than $354 million of crypto assets invested in PulseChain, including crypto assets
invested  by  investors  in  the  United  States.    Neither Heart  nor  PulseChain has  registered  the
PulseChain Offering with the Commission.
b. Heart Emphasized that Investors Would Profit from PLS Tokens and
Directly Tied the Value of the PLS Tokens to the Development of PulseChain
56. On the PulseChain website that he controls and in a May 16, 2021 livestream on
his YouTube channel, Heart touted the various benefits and value of PulseChain, including that it
purportedly has faster transaction times and cheaper gas fees than Ethereum.  Heart indicated that
PLS  investors  would  profit  from  the  transaction  fees  paid  for crypto  asset  transactions  on
PulseChain.
57. PulseChain operates  by  purportedly  paying  75%  of  all  PLS  tokens  generated
through gas fees  to  PLS  validators.
7
    The  other  25%  of  the  fees  are  sent  to  the  Ethereum
blockchain’s genesis address.  Any PLS investor can become a validator by “staking,” or locking
up, five million PLS tokens.

7
In a blockchain network, a validator is a participant that is responsible for validating new transactions and
maintaining the security of the blockchain.

18

58. Similar to the Hex Offering, Heart told PulseChain investors during the PulseChain
Offering Period that they could expect to make profits by investing in PulseChain.  For example,
on August 1, 2021, via a YouTube video he posted during the PulseChain Offering, Heart claimed
that “14,000x is a reasonable estimate for what could be possible for Pulse because that’s what
Ethereum did and this is a very similar thing but better.”
59. At the 2023 Hex Conference on January 9, 2023—four months before the release
of  PulseChain—Heart explicitly referred  to  the  value  of  PulseChain  as  a  return  on  investment,
using the phrase “ROI.”  Heart stated: “PulseChain’s gonna launch at zero...it’s pretty hard to beat
the ROI of something that goes from zero to anything because, you know, in theory it’s like infinite
ROI.”
60. PLS  tokens  derive  their  value  from  Heart’s  efforts  in  developing  and  releasing
PulseChain and in making it successful.  In fact, investors did not receive their PLS tokens until
PulseChain was released on May 12, 2023, almost two years after the end of the official PulseChain
Offering Period.  One PulseChain investor,  who resides in Brooklyn, confirmed that he invested
in PulseChain because he believed he would receive PLS tokens in exchange for his investment
and that he expected, based on Heart’s statements, that the PLS tokens would increase in value.
c. Heart Misappropriated PulseChain Investor Funds
61. During  the PulseChain  Offering  Period,  as  extended  (see  footnote  6),  investors
invested more than $354 million of crypto assets in PulseChain.  Between July 15, 2021 and March
3, 2022, however, it appears as if Heart transferred or directed the transfer of approximately $217
million in PulseChain offering proceeds, consisting of various crypto assets (ETH, DAI, USDC,
and Tether), from the PulseChain SA to a privately held wallet (“Private Wallet”).  On January 26,
2022, after the official closing of the PulseChain Offering, more than $26.5 million of Tether was
transferred from the Private Wallet in 22 back-and-forth transactions resulting in approximately

19

$26 million in ETH being deposited to the Private Wallet.  Next, it appears as if Heart transferred,
or  directed  the  transfer  of,   $26  million  in  ETH  through  a  crypto  asset  mixer  (“Mixer”)—that
facilitates anonymous transactions by obfuscating their origin, destination, and counterparties—
and then through at least 50 intermediary wallets before ending up on three purported crypto asset
platforms.    As  discussed  below  in  paragraphs  62-63, it  appears  that  that  Heart  controlled,  and
ultimately  benefited  (in  the  form  of  luxury  purchases)  from,  these  transactions.    Notably,  Heart
previously  discussed  his  familiarity  with  the  Mixer  in  a  December  2,  2019  livestream  video  on
YouTube, and highlighted its purported anonymity protections.
62. Following the Mixer transactions,  Heart misappropriated at least $12.1 million of
PulseChain investor assets between August 3, 2021 and September 22, 2022, to fund his purchases
of luxury  goods,  including  cars  and  watches.    For  example,  on  August  3,  2021,  Heart  spent
$337,642 of PulseChain investor assets on the purchase of a luxury car from a European luxury
car dealer.  On August 24, 2021, Heart transferred another $534,916 to the same luxury car dealer
for the  purchase  of  a  McLaren  sports  car.   On  August  29,  2021,  Heart  purchased  a  2020  white
Ferrari Roma for $314,125.  From January 2022 through March 2022, Heart also purchased five
watches  in  separate  transactions.    Heart’s  first  purchase,  on  January  20,  2022, included:  (1)  a
$285,799  Rolex  Submariner  Oyster,  (2)  a  $550,000  Rolex  Daytona  Eye  of  the  Tiger,  and  (3)  a
$800,000 Rolex GMT – Master II.  On April 5, 2022, Heart spent an additional $1.38 million to
purchase another Rolex watch.  On April 10, 2022, Heart spent $419,192 of PulseChain investor
assets  to  purchase  another  watch.    Collectively,  from  the  Mixer  transactions  alone,  Heart  spent
nearly $7.2 million of PulseChain investor assets on luxury watches and high-end automobiles that
he purchased in the United States, Finland, and Estonia.

20

63. In additional transactions occurring    after    the    Mixer transfers,    Heart
misappropriated approximately $5 million of PulseChain investor assets, sending a majority of the
assets to Sotheby’s in February 2022 to purchase a 555-carat black diamond called “The Enigma,”
purportedly the largest black diamond in the world.  Heart purchased the diamond for £3,161,000
($4.28 million at the time of the transaction), funding the purchase by transferring both ETH and
fiat currency to Sotheby’s.
64. Often  discussing  the  development  work  surrounding  PulseChain,  Heart gave
investors a  reasonable expectation that their funds would be used to develop PulseChain.  He also
tied investors’ receipt of PLS tokens to the ultimate release of PulseChain, leading a reasonable
investor to believe that PulseChain investor assets would be used to develop PulseChain.  At least
one Brooklyn investor in PulseChain has confirmed that he believed his investment would be used
to develop PulseChain.
65. In a January 16, 2022 YouTube livestream, Heart described the work that he and
his  developers  had  done  and  were  doing,  as  well  as  work  that  remained  to  be  done,   to  bring
PulseChain  and  PLS  out  of  the  testing  phase  and  into  “main  net”  launch  phase.    Reasonable
investors  rightfully  expected  that,  if  the  PulseChain  network  was  not finished  and, thereafter,
maintained by Heart and his team of developers, it would collapse along with the value of PLS.
66. Heart  frequently  claimed  that  an  investment  in  PulseChain  was  linked  to  free
speech, for example stating on July 21, 2021 that, “you believe free speech is a protected human
right  and  blockchains  are  speech,  and  you’re  sacrificing  to prove  that  you  believe  that.”
Meanwhile, Heart never disclosed to PulseChain investors that any investor assets,  let alone more
than $12 million, would be used to fund his purchases of personal luxury goods.  Heart also never
disclosed  that  $217  million  of  investor  assets  would  be  immediately  transferred  from  the

21

PulseChain SA to the Private Wallet.  Further, Heart used a so-called decentralized aggregator and
the Mixer to conceal his misappropriation of PulseChain investor assets for his own personal use.
IV. PulseX
a. PulseChain Development and Offering
67. Around  the  same  time  that  Heart  started  developing  PulseChain,  he  also  started
developing PulseX.  On the PulseX website (pulsex.com),   which Heart owns and controls, Heart
described  PulseX  as  a  fork  of  Uniswap’s  so-called  decentralized  trading  platform  that  would
purportedly  enable  users  to  trade  so-called PRC-20  tokens
8
  offered  and  sold for  trading  on
PulseChain.  At pulsex.com, Heart instructed investors on how to invest in PulseX by depositing
crypto assets in exchange for PLSX, the PulseX platform’s anticipated native token, to be delivered
to investors when PulseX launched.  Heart sold PLSX tokens to PulseX investors, including U.S.-
based  investors,  between  December  29,  2021  and  February  26,  2022 (the  offering  period  was
unofficially  extended  until  approximately  April  6,  2022 to  allow  Heart  to  continue  to  accept
investor assets) (the “PulseX Offering Period”).  Heart pooled each investor’s deposit of crypto
assets  in  the  PulseX  Sacrifice  Address  (“PulseX  SA”).    There have  been  more  than  120,000
deposits totaling  over  $676  million  in  multiple  crypto  assets  to  the  PulseX  SA.    This  amount
excludes any deposits of Hex tokens to the PulseX SA, which, as discussed in paragraph 37 above,
may have been held by Heart or other insiders.
68.   PulseX.com states that PulseX will work like Uniswap and that “every time people
swap from one coin to another on PulseX, [liquidity] providers earn fees as a reward” in the form
of PLSX.

8
 PRC-20 is a protocol, designed by Heart and his developers, that governs how the PulseChain network functions.

22

69. On  or  about  May  12,  2023,  Heart deployed  PulseX  and  investors  received  their
PLSX tokens.
b. Heart Emphasized that Investors Would Profit from PLSX Tokens and
Directly Tied their Value to the Development and Success of PulseChain and
PulseX
70. The pulsex.com website states that “PLSX is designed to increase in value.”  During
a  January  23,  2022 YouTube  livestream,   Heart  claimed  that in  PulseX,  “we  have  the  coolest,
highest liquidity automated market maker exchange.”  Earlier, in  December 2021, Heart stated that
he believed PLSX tokens would appreciate and that “10,000x in two years is well within the realm
of  possibility.”    On  April  26,  2022,  Heart  told  one  prospective  New  York  City  investor  via
Telegram chat that “PulseX is an exchange online where you can swap all kinds of coins on the
PulseChain.”    He  claimed  that  “22%  of  the  fees  are  used  to  buy  and  burn  the  PLSX  token  so
basically  owning  PLSX  is  similar  to  owning  part  of  an  exchange.”    In  the  same chat,  Heart
provided the  prospective New  York  investor with step-by-step  instructions  on  how  to  purchase
crypto assets, and then how to transfer those to PulseChain and swap those tokens on PulseX.
71. On the January 23, 2022 YouTube livestream referenced in the previous paragraph,
Heart also touted PulseX’s success, claiming that it had secured about $1 billion in investments
(“sacrificed” crypto assets).  All PulseX investor funds flowed through the PulseX SA, a wallet
address that Heart provided to developers.  Overlapping with the PulseChain release, on March 11
and 12, 2023, over $100 million of PulseX investor funds (nearly 25% of the total crypto assets
raised, excluding Hex tokens), were transferred to a privately held wallet (“Private Wallet 2”).  It
appears as if Heart directed this transfer and controls Private Wallet 2.
72. Heart  actively  directed  development  efforts  for  both  PulseChain  and  PulseX  and
paid a team of developers.  Heart tied the launch of PulseX and PulseChain to an increase in profits
for Hex, PulseChain, and PulseX investors.  Heart noted that the investments of Hex tokens during

23

the PulseX offering removed hundreds of millions of dollars of Hex tokens from the circulating
supply.  As a result of this reduced supply of Hex tokens in circulation, Heart stated his purported
belief that the price of the Hex token would appreciate.  Further, in a December 24, 2021 YouTube
livestream, Heart opined that, “I think Hex on Pulse is going to be more valuable than Hex on the
Ethereum network.”
73. Neither Heart nor  PulseX  has  ever  registered  the  PulseX  Offering  with  the
Commission.
V. Heart Often Repeated False Claims that His Offerings Were Not Securities
Offerings.

74. Although  Heart  frequently  made  superficial  disclaimers  about  the  status  of  his
offerings  under  the  U.S. securities  laws,  the  economic  reality  of  these  offerings—and  his
promotions of the offerings—were contrary to these disclaimers.
75. In reality, as Heart has admitted, he sold Hex, PulseChain, and PulseX as potential
avenues to investor wealth, and the success of these endeavors were completely dependent on his
efforts  (and/or  the  efforts  of  others),  and  not  on  the  efforts  of  the  investors  themselves.    For
example, on a January 16, 2022 YouTube livestream, Heart went through a list of incomplete tasks
and  development  milestones  that  he  and  his  developers  needed  to  complete  before  PulseChain
could be released.  He also touted the development milestones he had already attained, including
a months-long testing phase for features that had already been implemented in the testing space.
In an October 8, 2022 YouTube livestream, Heart commented in response to requests for updates
on the PulseChain and PulseX launch, “So, you ain’t getting any updates.  It’s done when it’s done.
Software is hard.  The [developers] are working hard on it.  That’s all there is to it.  You got to
wait, just like I’m waiting, except I don’t cry and moan while I wait.”

24

VI. Current Status
76. As of June 30, 2023: (a) Hex’s price was $.008841, down from a high of $0.56 in
September  2021;  (b)  PLS’s  price  is  $0.0001024,  down  from  a  high  of  $0.0003193  on  May  22,
2023; and (c) PLSX’s price is $0.00003112 down from a high of $0.000136 on May 22, 2023.  At
present, PLS and PLSX are practically worthless, and Hex’s value has dropped about 98.4% below
its all-time high.
CLAIMS FOR RELIEF
FIRST CLAIM FOR RELIEF

Fraud in Connection with the Purchase or Sale of a Security

Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules
10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)]

Against Defendants Heart and PulseChain
77. Plaintiff re-alleges and incorporates paragraphs 1 through 76 of this Complaint by
reference as if set forth verbatim in this Claim.
78. By  engaging  in  the  acts  and  conduct  alleged  herein,  Defendants Heart  and
PulseChain have, directly or indirectly, in connection with the purchase or sale of a security, by
the use of any means or instrumentality   of interstate commerce, or of the mails or of any facility
of any national securities exchange, knowingly or with severe recklessness:
a. employed a device, scheme, or artifice to defraud; and/or
b. engaged  in  an  act,  practice,  or course  of  business  which  operated  or  would
operate as a fraud or deceit upon any person.
79. By reason of the foregoing, Defendants Heart and PulseChain violated, and unless
enjoined will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules
10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)].

25

SECOND CLAIM FOR RELIEF

Fraud in the Offer or Sale of a Security

Violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act
[15 U.S.C. §§ 77q(a)(1) and (3)]

Against Defendants Heart and PulseChain

80. Plaintiff re-alleges and incorporates paragraphs 1 through 76 of this Complaint by
reference as if set forth verbatim in this Claim.
81. By  engaging  in  the  acts  and  conduct  alleged  herein,  Defendants  Heart  and
PulseChain,  in  the  offer  or sale  of  a  security,  by  the use  of  any  means  or  instruments  of
transportation  or  communication  in  interstate  commerce  or  by  use  of  the  mails,  directly  or
indirectly, have:
a. knowingly  or  with  severe  recklessness  employed  a  device,  scheme,  or
artifice to defraud; and/or
b. knowingly, recklessly, or negligently engaged in a transaction, practice, or
course of business which operated or would operate as a fraud or deceit upon the purchaser.
82. By reason of the foregoing, Defendants Heart and PulseChain have violated, and
unless enjoined will continue to violate, Sections   17(a)(1) and (3) of the Securities Act [15 U.S.C.
§§ 77q(a)(1) and (3)].
THIRD CLAIM FOR RELIEF

Securities-Registration Violations

Violations of Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)]

Against all Defendants

83. Plaintiff re-alleges and incorporates paragraphs 1 through 76 of this Complaint by
reference as if set forth verbatim in this Claim.

26

84. By  engaging  in  the  acts  and  conduct  alleged  herein,  Defendants  directly  or
indirectly:
a. made  use  of  the  means  or  instruments  of  transportation  or  communication  in
interstate commerce or of the mails to sell, through the use or medium of any
prospectus or otherwise, securities as to which no registration statement was in
effect; and/or
b. for  the  purpose  of  sale  or  delivery  after  sale,  carried  or  caused  to  be  carried
through  the  mails  or  in  interstate  commerce,  by  means  or  instruments  of
transportation,  securities  as  to  which  no  registration  statement  was  in  effect;
and/or
c. made  use  of  means  or  instruments  of  transportation  or  communication  in
interstate commerce or of the mails to offer to sell, through the use or medium
of any prospectus or otherwise, securities as to which no registration statement
had been filed.
85. There were no applicable exemptions from registration.
86. By engaging in the conduct described above, Defendants have violated, and unless
enjoined will continue to violate, Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a)
and (c)].
PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court enter a judgment:
1. Permanently  enjoining  Defendants  Heart  and  PulseChain  from  violating  Section
17(a) of the Securities Act [15 U.S.C. § 77q(a)] and Section 10(b) of the Exchange Act [15 U.S.C.
§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];

27

2. Permanently enjoining all Defendants from violating Sections 5(a) and 5(c) of the
Securities Act [15 U.S.C. §§ 77e(a) and (c)];
3. Permanently  barring  Defendants  from  participating,  directly  or  indirectly,  in  the
purchase,  offer,  or  sale  of  any  crypto  asset  security,  or  engaging  in  activities  for  purposes   of
inducing or attempting to induce the purchase, offer, or sale of any crypto asset security by others;
4. Ordering Heart to disgorge, jointly and severally with each of Hex, PulseChain, and
PulseX, all ill-gotten gains received as a result of the violations alleged herein, plus prejudgment
interest  on  those  amounts,  pursuant  to  the  Court’s  equitable  powers  and  Sections  21(d)(3),
21(d)(5), and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)];
5. Ordering  the  Defendants  to  pay  civil  penalties  pursuant  to  Section  20(d)  of  the
Securities  Act  [15  U.S.C.  §  77t(d)]  and  Section  21(d)(3)  of  the  Exchange  Act  [15  U.S.C.  §
78u(d)(3)]; and
6. Imposing such other and further relief as the Court may deem just and proper.

Dated:   July 31, 2023     Respectfully submitted,

/s/ Matthew J. Gulde
Matthew J. Gulde
Illinois Bar No. 6272325
United States Securities and
Exchange Commission
Burnett Plaza, Suite 1900
801 Cherry Street, Unit 18
Fort Worth, TX  76102
Telephone:  (817) 978-3821
Facsimile:  (817) 978-4927
[email protected]

ATTORNEY FOR PLAINTIFF SECURITIES
AND EXCHANGE COMMISSION

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF NEW YORK 
________________________________________________ 
        ) 
SECURITIES AND EXCHANGE COMMISSION, ) 
        )  
 Plaintiff,      ) 
        ) Civil Action No.:1:23-cv-5749    
v.        )  
        ) JURY TRIAL DEMANDED 
RICHARD J. SCHUELER, a/k/a RICHARD HEART,  ) 
HEX,        )  
PULSECHAIN, and      ) 
PULSEX,        ) 
        ) 

Defendants.      ) 
________________________________________________) 

 
COMPLAINT 

 
Plaintiff Securities and Exchange Commission (the “Commission” or “SEC”) alleges: 

SUMMARY OF THE ACTION 

1. Richard Schueler, also known as Richard Heart (“Heart”), is an American-born 

Internet marketer, content creator, and serial entrepreneur living in Finland.  Heart operates 

through three unincorporated alter-ego entities, Hex, PulseChain, and PulseX.  Beginning in 

December 2019, and continuing for at least the next three years, Heart raised more than $1 billion 

in the unregistered offer and sale of crypto asset securities to retail investors in the U.S. and abroad.  

Heart engaged in three separate offerings: Hex, PulseChain, and PulseX.  Each was, and is, a crypto 

asset security, and PulseChain and PulseX are crypto asset security platforms designed, created, 

and maintained by Heart.  Heart continually touted these investments as a pathway to grandiose 

wealth for investors, claiming that Hex, for example, “was built to be the highest appreciating asset 

that has ever existed in the history of man.”  Heart hired and directed developers to build and 

maintain the software framework to support Hex, PulseChain, and PulseX.  Although Heart 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 1 of 27 PageID #: 1



2 
 

claimed these investments were for the vague purpose of supporting free speech, he did not 

disclose that he used millions of dollars of PulseChain investor funds to buy luxury goods for 

himself.  Heart, Hex, PulseChain, and PulseX violated the federal securities laws through the 

unregistered offer and sale of securities.  Additionally, through the misappropriation of investor 

assets, Heart and PulseChain defrauded their investors.    

2.  Beginning in December 2019, Heart offered and sold Hex tokens, promising 

investors many incentives and bonuses, while marketing Hex as the first high-yield “Blockchain 

Certificate of Deposit” launched on the Ethereum network.  Additionally, Heart touted a Hex 

feature that he developed and dubbed “staking,” which he described as allowing Hex investors to 

lock up their Hex tokens for a designated period of time in return for additional Hex tokens at the 

end of their lock-up period.  Heart claimed that investors who participated in the so-called 

“staking” of Hex tokens could earn an average of 38% annual return in the form of additional Hex 

tokens. 

3. 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.  In exchange for their investment, Heart issued Hex tokens to 

investors.  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, while creating the false impression of significant trading volume and 

organic demand for Hex tokens.  

4. Between July 2021 and April 2022, Heart conducted additional unregistered 

offerings of investments he developed called PulseChain (offering “PLS” tokens) and PulseX 

(offering “PLSX” tokens).  For both the PulseChain and PulseX offerings, Heart urged investors 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 2 of 27 PageID #: 2



3 
 

to invest by depositing their crypto assets to the PulseChain and PulseX public wallet addresses in 

exchange for a promise to deliver PLS and PLSX tokens in the future.  

5. Investors invested more than $354 million by depositing their crypto assets to the 

PulseChain public wallet address in exchange for the promise of future delivery of PLS tokens.  In 

connection with PulseX, investors invested more than $676 million by depositing their crypto 

assets to the PulseX public wallet address in exchange for the promise of future delivery of PLSX 

tokens.  

6. Heart is familiar with the U.S. securities laws and the test (established in SEC v. 

W.J. Howey Co., 328 U.S. 293 (1946)) for determining what is and is not a security, specifically.  

So he frequently makes veiled references about why investors can expect profits while also making 

tongue-in-cheek disavowals.  But his efforts to obfuscate are unavailing.  Each of the Hex, 

PulseChain, and PulseX offerings involved investments of money in common enterprises with the 

reasonable expectation of profits to be derived based on the efforts of others.  Accordingly, the 

Hex, PulseChain, and PulseX offerings were securities offerings.  At no time did Heart (or anyone 

else associated with these offerings) register the Hex, PulseChain, or PulseX offerings with the 

Commission. 

7. Additionally, Heart and PulseChain defrauded investors by misappropriating at 

least $12.1 million of PulseChain investor funds.  Instead of using these investor funds to develop 

and market the PulseChain network, or even to fulfill Heart’s explicit statement that invested funds 

supported “freedom of speech,” Heart and PulseChain used at least $12.1 million of investor funds 

for Heart’s personal luxury purchases, including a 555-carat diamond, expensive watches, and 

high-end automobiles.  

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 3 of 27 PageID #: 3



4 
 

8. Through their actions, Defendants Heart and PulseChain violated, and unless 

enjoined will continue to violate, the antifraud provisions of the federal securities laws, namely 

Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and 

Rules 10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)] and Sections 17(a)(1) and 

(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(1) and (3)].   

9.  Additionally, through their actions, all Defendants violated, and unless enjoined 

will continue to violate, the securities-registration provisions of the federal securities laws, 

namely Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)].  

10. To protect the public from further harm and fraudulent activity, the SEC brings this 

action against Defendants and seeks: (i) permanent injunctive relief; (ii) disgorgement of ill-gotten 

gains, plus prejudgment interest; and (iii) civil penalties. 

DEFENDANTS 

11. Richard J. Schueler, a/k/a Richard Heart, age 43, is a U.S. citizen who, upon 

information and belief, currently resides in Helsinki, Finland.  He is the founder of Hex, 

PulseChain, and PulseX.     

12. Hex is an ERC-201 token and an unincorporated entity established by Heart, which 

serves as an alter-ego entity for Heart.  Heart operates Hex’s websites at hex.com, hex.win, and 

ethhex.com.  Offerings for and sales of Hex or Hex tokens have not been registered with the 

Commission. 

13. PulseChain purports to be an Ethereum fork and layer-1 blockchain that Heart 

released on May 12, 2023.  PulseChain is an unincorporated entity established by Heart that serves 

as an alter-ego entity for Heart.  Heart operates PulseChain’s website at pulsechain.com.  Pulse 

                                                           
1 ERC-20 is a technical standard that defines how so-called “fungible tokens” operate on the Ethereum blockchains. 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 4 of 27 PageID #: 4



5 
 

(PLS) is the native token for PulseChain.  Offerings for and sales of PulseChain and PLS tokens 

have not been registered with the Commission.  

14. PulseX is a self-described decentralized protocol on the Ethereum blockchain that 

Heart developed to serve as PulseChain’s so-called decentralized crypto asset trading platform 

through a fork of the Uniswap platform.  Rather than employing a traditional order book and 

matching engine to execute orders for securities, Uniswap’s core feature is an automated market 

maker, a smart contract on the Ethereum blockchain that allows “liquidity providers” to pool 

assets for sale and allows people to purchase those assets from the pools.  Heart deployed PulseX 

on May 12, 2023.  PulseX is an unincorporated entity established by Heart that serves as an alter-

ego entity for Heart.  Heart also operates a website for PulseX at pulsex.com.  PulseX (PLSX) is 

the native token for PulseX.  Offerings for and sales of PulseX and PLSX tokens have not been 

registered with the Commission.   

JURISDICTION AND VENUE 

15. The Commission brings this action pursuant to authority conferred upon it by 

Sections 20(b) and 20(d) of the Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)] and Sections 21(d) 

and 21(e) of the Exchange Act [15 U.S.C. §§ 78u(d) and 78u(e)]. 

16. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

Securities Act [15 US.C. § 77v(a)] and Sections 21(d), 21(e), and 27 of the Exchange Act [15 

U.S.C. §§ 78u(d), (e), and 78aa]. 

17. In connection with the conduct described in this Complaint, Defendants, directly or 

indirectly, made use of the mails or the means or instruments of transportation or communication 

in interstate commerce, including but not limited to email, wiring of funds, and use of brokerage 

accounts.  

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 5 of 27 PageID #: 5



6 
 

18. Venue is proper in this District because many of the crypto asset transactions 

described herein took place on Uniswap, a so-called decentralized crypto asset trading platform 

whose developers are headquartered in Brooklyn.  Heart specifically designed PulseX as a fork of 

Uniswap.  Additionally, at least one investor of PulseChain and PulseX resides in this District. 

FACTUAL ALLEGATIONS 

I. HEART 

19. Richard Heart was born Richard J. Schueler and raised in Florida.  Heart is an 

Internet marketer, and prolific content creator who claims to have founded and managed several 

successful Internet startups, including a business he claims employed 150 people and had $60 

million in annual sales. 

II. HEX 

a. Heart’s Development and Promotion of Hex  

20. Heart is the founder and creator of Hex and the Hex token, a crypto asset security 

he designed to operate on the Ethereum network.  Heart has often touted Hex as the first high-yield 

“Blockchain Certificate of Deposit.”  Heart first marketed Hex to public investors at a Crypto 

Finance Live conference in November 2018—more than a year before his first sales of Hex tokens.  

Heart was the sole promoter of Hex and appeared on several online platforms to promote it before 

he launched the offering of Hex tokens.  Heart promoted Hex, the contract code,2 various incentive 

and referral bonuses, and Hex’s so-called “staking” feature across multiple online and social media 

platforms, but particularly in YouTube livestream videos.  Heart continued to market Hex 

throughout 2019 and during his offer and sale of Hex tokens, which commenced on or about 

December 3, 2019 and continued through at least November 19, 2020 (the “Hex Offering”).   

                                                           
2 Certain blockchains have the ability to run self-executing computer programs, known colloquially as “smart 
contracts,” that perform certain functions when predetermined conditions are met. 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 6 of 27 PageID #: 6



7 
 

i. Investors Reasonably Expected to Derive Profits from Hex Tokens 
 
21. Hex investors could derive increased value by holding their Hex tokens and waiting 

for them to appreciate based on principles of supply and demand, or by trading them, but Heart 

designed Hex so that the tokens had an additional benefit—a so-called “staking” option that would 

allow investors to lock up their Hex tokens in order to receive additional Hex tokens in the future, 

depending on a number of factors, including the duration of the token holder’s so-called “stake.”  

Hex’s so-called “staking” mechanism does not involve validating transactions on the blockchain.  

On the Hex.com website, Heart analogized his so-called “staking” process to conventional interest 

payments and investment returns.  

22. Heart told potential investors on many occasions, including via several YouTube 

livestreams, that Hex investors could “stake” their Hex tokens through a process in which the 

tokens are sent to the Ethereum blockchain’s genesis address.  That address has no “owner” and, 

therefore, assets that are sent to it cannot be transferred out.  In exchange for investors locking up 

their Hex tokens, Heart promised that the Hex smart contract would pay the investors investment 

returns in the form of additional Hex tokens to be delivered in the future.  Heart has repeatedly 

explained, including during a YouTube livestream interview in December 2019, that the purpose 

of this form of purported “staking” was to incentivize investors to lock up their Hex tokens—

which reduced the number of Hex tokens in circulation—to drive up their price.  Heart and Hex 

repeatedly advertised, including on Hex.com, social media, and in interviews, that investors would 

receive an average investment return of 38% in exchange for so-called “staking” their Hex tokens.  

23. Heart explained that this self-described “staking protocol” benefited all holders of 

Hex tokens by increasing the token price based on supply-and-demand principles. 

 

 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 7 of 27 PageID #: 7



8 
 

ii. Heart Emphasized that Investors Would Profit from Hex Tokens 
 
24. Heart has repeatedly made statements on Hex.com and social media that would lead 

potential investors to believe that they would profit from an investment in Hex.  For example, 

Heart often promoted Hex on social media.  Leading up to the Hex Offering, Heart touted on a 

November 8, 2019 YouTube livestream that, “if you want to get rich, [Hex is] built for that,” a 

refrain that he would repeat many times. 

25. Heart pumped Hex’s capacity for investment gain, claiming at Hex.com (until at 

least November 1, 2020) that, “Hex is designed to surpass ETH, which did 10,000x price in 2.5 

years.  It’s working!  So far, HEX’s USD price went up 115x in 129 days.”  On December 2, 2019, 

during a seven-hour livestream on YouTube hours before the Hex Offering commenced, Heart 

stated that Hex “was built to outperform Ethereum and Bitcoin and all other cryptocurrencies.”  

Heart added that “[Hex] was built to be the highest appreciating asset that has ever existed in the 

history of man.  That’s the design intention.” 

iii. Heart Personally Undertook Efforts He Claimed Would Make Hex Successful 
 
26. From the outset, Heart controlled—and continues to control—nearly all aspects of 

the Hex ecosystem.  In a November 17, 2019 livestream on YouTube, Heart shared with potential 

investors “how-to” videos that he created to explain how investors could: (1) purchase Hex tokens 

during the offering period, and (2) stake their Hex tokens.  In that livestream, Heart also shared 

additional efforts he was undertaking, including the creation of more “walk through” videos and 

“ringing up some more exchanges and whales [he] know[s]” in order to make the Hex launch 

successful.  In the same video, Heart disclosed that he directed certain developers to work on the 

Hex code to the extent that their work “benefit[ted] the ecosystem.”   

27. In a November 12, 2020 YouTube livestream, Heart was asked how much of his 

time was going towards Hex; Heart stated: “almost all of it.”  As recently as the January 2023 Hex 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 8 of 27 PageID #: 8



9 
 

Conference (which was virtual, and available on YouTube), Heart stated regarding Hex, “I want 

to be – I want to have the best performing asset that’s ever existed. I want to be the best crypto 

founder that’s ever existed.  I like doing – I like owning the world’s largest diamond.  I like having 

a coin that went up a million percent that’s had 3 years of flawless operation, that’s never been 

hacked.  The front end has never gone down.” 

28. In an earlier YouTube livestream on July 16, 2019, Heart admitted how important 

his efforts were to ensuring that the Hex token, once launched, would be available for trading on 

so-called crypto asset trading platforms.  He promised that he was “going to personally call 

everyone and see where [he] can get [Hex] listed.”  In fact, before the close of the Hex Offering, 

Heart contacted representatives of a so-called crypto asset trading platform at least twice through 

private Twitter messages.  In those messages, Heart discussed the potential promotion of Hex 

tokens on the platform through Twitter, and also commented on Hex being the number one volume 

liquidity pool3 on the platform.  It appears that, on December 15, 2019, the platform began listing 

Hex’s tokens on its so-called decentralized crypto asset trading platform as a result of Heart’s 

direct efforts. 

b. The Hex Offering 

29. From December 3, 2019 through at least November 19, 2020 (the “Hex Offering 

Period”), Hex and Heart offered and sold Hex tokens to investors in exchange for ETH.  As part 

of the Hex Offering, Hex and Heart accepted investments of ETH from the public, including from 

investors in the United States, and delivered Hex tokens in return.   

30. During the Hex Offering Period, investors purchased Hex tokens by transferring 

ETH to a Hex wallet address on the Ethereum blockchain.  This wallet is known as the “Hex 

                                                           
3 A liquidity pool is a collection of crypto assets grouped into a smart contract to facilitate trades on a blockchain 
network.  

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 9 of 27 PageID #: 9



10 
 

contract address” (“Hex CA”).  Heart provided the Hex CA to developers so that it would be 

programmed into Hex’s contract code.  Initially, investors who wanted to obtain Hex tokens 

purchased them through an online portal called the “Adoption Amplifier.”  Heart designed, 

controlled, and promoted the Adoption Amplifier to potential Hex investors, and Heart oversaw 

the development of Hex’s code in its smart contract.   

31. Heart publicly claimed that he relied on game theory in designing the purchase 

process for Hex tokens to reward larger, longer, and earlier investments.  For example, Hex and 

Heart made available only a pre-determined number of Hex tokens for purchase each day.  For the 

first day of the Hex Offering Period, the pre-determined number was one billion Hex tokens.  

Investors who wanted to purchase Hex tokens sent their ETH to the Hex CA, and Hex tokens were 

distributed to these investors based on: (1) how much total ETH the investors sent to the Hex CA 

on that particular day, and (2) the pre-determined amount of Hex tokens that Heart and Hex made 

available that day.   

i. Heart Designed Incentives to Generate Investor Interest 
 
32. During the Hex Offering Period, Heart designed and implemented many incentives 

and bonuses to lure investors, including the promise of additional future Hex tokens.  For example, 

Heart used bonus payments to encourage investors to increase their investments in order to make 

profits from the price appreciation that Heart told investors to expect.  Hex.com promoted the Hex 

ecosystem and, at least through November 25, 2020, stated: “Hex aligns incentives, so the more 

people that participate, the better everyone does.”  

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 10 of 27 PageID #: 10



11 
 

33. Heart conducted two separate airdrops4 during the Hex Offering Period to generate 

additional investor interest by promoting Hex to the broader crypto asset market.  Via these 

airdrops, Heart directed Hex developers to deposit Hex tokens into a large number of wallets that 

he identified as significant holders of Bitcoin, even though the people controlling those Bitcoin 

wallets had not requested Hex tokens.  Heart orchestrated a similar airdrop on a later date to a list 

of wallet addresses that Heart identified as large holders of ETH.  If those wallet holders accepted 

the airdropped Hex tokens from Hex, Heart required that 90% of those Hex tokens be “staked” in 

the process described in more detail in paragraphs 44-49 below.   

ii. Heart Pooled Investor Funds  
 

34. Heart conducted the Hex Offering worldwide, via the Internet, with no restrictions 

on who could access the Hex.com and Hex.win websites.  During the Hex Offering, there were 

more than 2,371,362 ETH deposits to the Hex CA, totaling approximately 1.3 million transactions.  

These transactions can be traced to at least 21,156 identifiable wallet addresses, including wallet 

addresses that belong to investors in the United States.   

35. Upon receipt of ETH from investors, Hex and Heart pooled these investor crypto 

assets into the same wallet address: the Hex CA.  Heart specifically directed his developers to 

program the Hex code to create the pooling of crypto assets received from investors.  Heart directed 

that Hex’s code include a function that “flushed,” or automatically transferred, all of these pooled 

investor crypto assets out of the Hex CA to a separate private wallet address that Heart also 

provided to the Hex developers.  This wallet address was referred to as the “Hex Flush Address.”  

                                                           
4 In the crypto asset space, an airdrop typically refers to the distribution of crypto assets to certain recipients, 
purportedly without requiring them to pay cash consideration to receive the asset.  On blockchains, typically a wallet 
automatically receives crypto assets sent to it without the owner having to take any steps to accept that new asset.  
Heart employed a variation on the typical airdrop, requiring a large portion of the tokens to be “staked.” 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 11 of 27 PageID #: 11



12 
 

36. Before he began selling Hex tokens, Heart provided his developers with both the 

Hex CA and the Hex Flush Address and instructed them on the flow of invested funds out of the 

Hex CA and into the Hex Flush Address.  It appears that Heart owns and controls both the Hex 

CA and the Hex Flush Address. 

37. After the more than 2.3 million ETH (see Paragraph 34 above) was deposited to the 

Hex CA and transferred to the Hex Flush Address, the ETH was subsequently sent on through a 

number of transactions—typically involving a series of intermediary addresses—to a so-called 

crypto asset trading platform.  Then, the ETH was sent back to the Hex CA through another series 

of transactions involving intermediary addresses.  An analysis of these repetitive ETH transactions 

into the Hex CA indicates that approximately 94-97% of the ETH deposited into the Hex CA was 

recycled through the so-called crypto asset trading platform.  This created the inaccurate 

appearance that there was significant organic demand for Hex tokens.  The series of transactions 

and the use of intermediaries obscured that 94-97% of ETH deposits was directed from the Hex 

Flush Address back to the Hex CA as seemingly new investments by unrelated investors.    

c. Hex and Heart Continued to Promote and Develop the Hex Ecosystem after 
the Hex Offering 

38. After the Hex Offering concluded in November 2020, Heart continued to engage in 

extensive marketing efforts and social media campaigns to promote Hex, because Hex’s success 

is, and has been, dependent on Heart’s efforts and his maintenance of the Hex ecosystem and 

secondary market demand.   

39. After the Hex Offering concluded, Hex and Heart continued to make public 

statements extolling the value of Hex tokens.  For example, Hex’s website currently states:  

• “Hex has already done a 10,000x in under 2 years . . .”;  

• “The price of Hex appreciated faster than anything else”;  

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 12 of 27 PageID #: 12



13 
 

• “Hex’s price went up 1421x against Bitcoin and 361x against Ethereum”; and  

• “Hex’s primary design intention is price appreciation . . .”  

40. Similarly, after the Hex Offering concluded, Heart continued to tout to investors 

Hex’s so-called “staking” feature and to develop Hex’s secondary market, including through 

multiple websites that he owns and controls, including Hex.com, hex.win, and Ethhex.com, and 

on social media, including YouTube, Twitter, and Instagram.   

41. Since the Hex Offering closed, Hex investors can only purchase Hex tokens from 

third parties on various centralized and so-called decentralized crypto asset trading platforms.  

Heart’s entrepreneurial efforts continued as he instructed potential investors to do the following: 

(1) download and install a crypto asset browser extension that allows investors to store and manage 

their investments in Hex tokens; (2) purchase ETH using the browser extension via two online 

crypto asset trading platforms; (3) visit Ethhex.com, a domain that Heart controls and pays for, 

where investors are further directed on how to exchange their ETH for Hex tokens sold by 

secondary market participants; and (4) “stake” their HEX tokens by visiting go.hex.com (which is 

discussed further below in paragraphs 44-49).  Most secondary market transactions in Hex tokens 

occur on Uniswap, a self-described decentralized crypto asset trading platform whose developers 

are headquartered in Brooklyn. 

42. In a continued effort to build the Hex ecosystem and sustain a market for the 

exchange of Hex tokens, Heart developed Ethhex.com, a website interface that allows investors to 

engage in secondary market purchases of Hex tokens directly through Uniswap. 

43. As described in paragraph 72 below, Heart also touted to investors that the launch 

of PulseChain and PulseX would lead to an increase in profits for Hex investors.   

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 13 of 27 PageID #: 13



14 
 

d. Heart Developed a So-called Staking Feature Designed to Deliver Additional 
Profits to Investors 

44. Leading up to, during, and after the Hex Offering Period, Heart heavily marketed 

Hex’s alleged “staking” feature, which he designed.  In touting Hex’s so-called “staking” feature, 

Heart frequently marketed Hex as the first high-interest or high-yield “Blockchain Certificate of 

Deposit” launched on the Ethereum network.  In so doing, Heart and Hex created a reasonable 

expectation of profits—independent of any effort by investors.     

45. Heart designed the so-called staking feature of the Hex ecosystem whereby Hex 

investors were, and are, encouraged to lock up their Hex tokens for a designated period of time in 

exchange for the promise of receiving additional Hex tokens in the future, i.e., a return on their 

investments.  Hex investors can lock up their Hex tokens for periods ranging from one day to 15 

years through a software extension.  Hex investors purportedly lock up their Hex tokens by sending 

them to the Ethereum blockchain’s genesis address.  In the Hex ecosystem, Heart’s form of 

“staking” purportedly removes Hex tokens from circulation and thereby, according to Heart, 

increases the price of the Hex token based on general principles of supply and demand.   

46. Based on several factors, including the length of time that a Hex investor stakes 

their Hex tokens, Heart programmed the Hex smart contract to pay investors new Hex tokens, 

amounting to the number of tokens the investor staked plus accrued “interest” (calculated daily, 

but not paid out until the end of the lock-up period).  Heart has repeatedly claimed at Hex.com, in 

online interviews, and on Twitter that Hex “stakers” will receive an average annual return of 38% 

for their “stake.”  Heart has claimed on YouTube and Twitter that approximately ten percent of 

Hex token holders have staked their Hex tokens. 

47. During the Hex Offering Period, Heart also touted a rewards program called 

“BigPayDay,” in which he distributed unclaimed Hex tokens, plus other types of bonuses at the 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 14 of 27 PageID #: 14



15 
 

close of the offering, to investors who staked their Hex tokens.  These unclaimed Hex tokens were 

distributed to “stakers” based on the length of their lock-up period (with preference given to longer 

periods) and the number of Hex tokens they “staked.”  On November 18, 2020, just before the Hex 

Offering closed, Hex announced that the Hex tokens distributed via the BigPayDay event were 

worth at least $1 billion. 

48. In a November 27, 2019 interview livestreamed on YouTube shortly before the Hex 

Offering, Heart described the so-called “staking” feature as “virtual lending” within the Hex 

ecosystem, saying that, “when people stake their coins . . . the supply has reduced, which means 

that everyone that hasn’t staked their coins just virtually borrowed the money. . . . If you’re holding 

an unstaked Hex, every time someone else stakes the Hex, your Hex that you can trade and sell for 

fiat, it goes up in value.”   

49. Throughout the relevant time period, Heart has emphasized that the principles of 

supply and demand create a direct relationship between the number of “staked” tokens and the 

market value of Hex tokens.  For example, on December 2, 2019, Heart emphasized on YouTube 

how his so-called “staking” program would benefit all Hex token holders: “[b]ut in Hex, when 

people lock up their coins, and that is what caused the price to go up, then the market cap will go 

down, which gives you more room to grow . . . [a]nd then you could just keep building 

appreciations and mad gains.”  The Hex.com website currently states that “by staking their Hex, 

Stakers reduce the supply, which puts upwards pressure of Hex’s price.” 

50. Neither Heart nor Hex has ever registered Hex tokens or the Hex Offering with the 

Commission.   

 

 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 15 of 27 PageID #: 15



16 
 

III. PulseChain 

a. PulseChain Development and Offering 

51. After the Hex Offering concluded in November 2020, Heart started developing 

PulseChain, which Heart publicly claimed would be a fork of the Ethereum network.  The 

PulseChain website (pulsechain.com), which Heart controls, describes PulseChain as having 

cheaper gas fees5 and being four times faster than the Ethereum network.  Between July 15, 2021 

and August 3, 20216 (the “PulseChain Offering Period”), Heart orchestrated an offering to raise 

investor funds to develop PulseChain. During the PulseChain Offering Period, Heart and 

PulseChain instructed investors to invest in PulseChain by, as Heart called it, “sacrificing” 

(depositing) various forms of crypto assets (including ETH and others) to the PulseChain 

“sacrifice” address (“PulseChain SA”).  Through PulseChain’s website, Heart instructed investors 

on how to “sacrifice” their crypto assets to purchase Pulse (“PLS”), PulseChain’s native token.   

52. In exchange for an investment (a deposit of crypto assets), Heart promised to 

deliver PLS tokens to the investor in the future, tied to the amount of the investor’s investment 

(the “PulseChain Offering”).  Heart represented that the calculation of the promised number of 

PLS tokens to be delivered to an investor was based, in part, on: (a) the amount of the investor’s 

investment (or “sacrifice”) of crypto assets, and (b) how early in the PulseChain Offering Period 

the investment took place.  As a result, Heart incentivized investors to invest in PulseChain early.   

53. PLS tokens were delivered to investors on or about May 12, 2023, when PulseChain 

was deployed publicly, or as Heart described, available on “main net.”   

                                                           
5 A gas fee refers to the fee required to conduct transactions or execute contracts on the network. 
6 The PulseChain Offering Period was unofficially extended until at least approximately April 6, 2022 to allow 
Heart to continue accepting investor assets. 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 16 of 27 PageID #: 16



17 
 

54. According to Heart and PulseChain, because PLS tokens must be used for gas (or 

transaction) fees on PulseChain, PLS investors could make a profit from that demand simply by 

holding PLS.  Heart frequently stated that the purpose of PulseChain was to save Hex token holders 

from the high gas fees they were being forced to pay for Hex transactions on Ethereum.  Upon 

PulseChain’s release, PulseChain investors received a PulseChain-compatible copy of all their 

Ethereum-network crypto assets through an “airdrop,” in addition to the newly issued PLS tokens 

described above in paragraphs 51-53.   

55. To date, more than 59,000 deposits to the PulseChain SA have been identified, 

reflecting more than $354 million of crypto assets invested in PulseChain, including crypto assets 

invested by investors in the United States.  Neither Heart nor PulseChain has registered the 

PulseChain Offering with the Commission.   

b. Heart Emphasized that Investors Would Profit from PLS Tokens and 
Directly Tied the Value of the PLS Tokens to the Development of PulseChain 

56. On the PulseChain website that he controls and in a May 16, 2021 livestream on 

his YouTube channel, Heart touted the various benefits and value of PulseChain, including that it 

purportedly has faster transaction times and cheaper gas fees than Ethereum.  Heart indicated that 

PLS investors would profit from the transaction fees paid for crypto asset transactions on 

PulseChain.   

57. PulseChain operates by purportedly paying 75% of all PLS tokens generated 

through gas fees to PLS validators.7  The other 25% of the fees are sent to the Ethereum 

blockchain’s genesis address.  Any PLS investor can become a validator by “staking,” or locking 

up, five million PLS tokens.  

                                                           
7 In a blockchain network, a validator is a participant that is responsible for validating new transactions and 
maintaining the security of the blockchain. 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 17 of 27 PageID #: 17



18 
 

58. Similar to the Hex Offering, Heart told PulseChain investors during the PulseChain 

Offering Period that they could expect to make profits by investing in PulseChain.  For example, 

on August 1, 2021, via a YouTube video he posted during the PulseChain Offering, Heart claimed 

that “14,000x is a reasonable estimate for what could be possible for Pulse because that’s what 

Ethereum did and this is a very similar thing but better.”   

59. At the 2023 Hex Conference on January 9, 2023—four months before the release 

of PulseChain—Heart explicitly referred to the value of PulseChain as a return on investment, 

using the phrase “ROI.”  Heart stated: “PulseChain’s gonna launch at zero…it’s pretty hard to beat 

the ROI of something that goes from zero to anything because, you know, in theory it’s like infinite 

ROI.”  

60. PLS tokens derive their value from Heart’s efforts in developing and releasing 

PulseChain and in making it successful.  In fact, investors did not receive their PLS tokens until 

PulseChain was released on May 12, 2023, almost two years after the end of the official PulseChain 

Offering Period.  One PulseChain investor, who resides in Brooklyn, confirmed that he invested 

in PulseChain because he believed he would receive PLS tokens in exchange for his investment 

and that he expected, based on Heart’s statements, that the PLS tokens would increase in value.     

c. Heart Misappropriated PulseChain Investor Funds 

61. During the PulseChain Offering Period, as extended (see footnote 6), investors 

invested more than $354 million of crypto assets in PulseChain.  Between July 15, 2021 and March 

3, 2022, however, it appears as if Heart transferred or directed the transfer of approximately $217 

million in PulseChain offering proceeds, consisting of various crypto assets (ETH, DAI, USDC, 

and Tether), from the PulseChain SA to a privately held wallet (“Private Wallet”).  On January 26, 

2022, after the official closing of the PulseChain Offering, more than $26.5 million of Tether was 

transferred from the Private Wallet in 22 back-and-forth transactions resulting in approximately 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 18 of 27 PageID #: 18



19 
 

$26 million in ETH being deposited to the Private Wallet.  Next, it appears as if Heart transferred, 

or directed the transfer of, $26 million in ETH through a crypto asset mixer (“Mixer”)—that 

facilitates anonymous transactions by obfuscating their origin, destination, and counterparties—

and then through at least 50 intermediary wallets before ending up on three purported crypto asset 

platforms.  As discussed below in paragraphs 62-63, it appears that that Heart controlled, and 

ultimately benefited (in the form of luxury purchases) from, these transactions.  Notably, Heart 

previously discussed his familiarity with the Mixer in a December 2, 2019 livestream video on 

YouTube, and highlighted its purported anonymity protections.  

62. Following the Mixer transactions, Heart misappropriated at least $12.1 million of 

PulseChain investor assets between August 3, 2021 and September 22, 2022, to fund his purchases 

of luxury goods, including cars and watches.  For example, on August 3, 2021, Heart spent 

$337,642 of PulseChain investor assets on the purchase of a luxury car from a European luxury 

car dealer.  On August 24, 2021, Heart transferred another $534,916 to the same luxury car dealer 

for the purchase of a McLaren sports car.  On August 29, 2021, Heart purchased a 2020 white 

Ferrari Roma for $314,125.  From January 2022 through March 2022, Heart also purchased five 

watches in separate transactions.  Heart’s first purchase, on January 20, 2022, included: (1) a 

$285,799 Rolex Submariner Oyster, (2) a $550,000 Rolex Daytona Eye of the Tiger, and (3) a 

$800,000 Rolex GMT – Master II.  On April 5, 2022, Heart spent an additional $1.38 million to 

purchase another Rolex watch.  On April 10, 2022, Heart spent $419,192 of PulseChain investor 

assets to purchase another watch.  Collectively, from the Mixer transactions alone, Heart spent 

nearly $7.2 million of PulseChain investor assets on luxury watches and high-end automobiles that 

he purchased in the United States, Finland, and Estonia.   

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 19 of 27 PageID #: 19



20 
 

63. In additional transactions occurring after the Mixer transfers, Heart 

misappropriated approximately $5 million of PulseChain investor assets, sending a majority of the 

assets to Sotheby’s in February 2022 to purchase a 555-carat black diamond called “The Enigma,” 

purportedly the largest black diamond in the world.  Heart purchased the diamond for £3,161,000 

($4.28 million at the time of the transaction), funding the purchase by transferring both ETH and 

fiat currency to Sotheby’s.   

64. Often discussing the development work surrounding PulseChain, Heart gave 

investors a reasonable expectation that their funds would be used to develop PulseChain.  He also 

tied investors’ receipt of PLS tokens to the ultimate release of PulseChain, leading a reasonable 

investor to believe that PulseChain investor assets would be used to develop PulseChain.  At least 

one Brooklyn investor in PulseChain has confirmed that he believed his investment would be used 

to develop PulseChain.   

65. In a January 16, 2022 YouTube livestream, Heart described the work that he and 

his developers had done and were doing, as well as work that remained to be done, to bring 

PulseChain and PLS out of the testing phase and into “main net” launch phase.  Reasonable 

investors rightfully expected that, if the PulseChain network was not finished and, thereafter, 

maintained by Heart and his team of developers, it would collapse along with the value of PLS.   

66. Heart frequently claimed that an investment in PulseChain was linked to free 

speech, for example stating on July 21, 2021 that, “you believe free speech is a protected human 

right and blockchains are speech, and you’re sacrificing to prove that you believe that.”  

Meanwhile, Heart never disclosed to PulseChain investors that any investor assets, let alone more 

than $12 million, would be used to fund his purchases of personal luxury goods.  Heart also never 

disclosed that $217 million of investor assets would be immediately transferred from the 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 20 of 27 PageID #: 20



21 
 

PulseChain SA to the Private Wallet.  Further, Heart used a so-called decentralized aggregator and 

the Mixer to conceal his misappropriation of PulseChain investor assets for his own personal use. 

IV. PulseX  

a. PulseChain Development and Offering 

67. Around the same time that Heart started developing PulseChain, he also started 

developing PulseX.  On the PulseX website (pulsex.com), which Heart owns and controls, Heart 

described PulseX as a fork of Uniswap’s so-called decentralized trading platform that would 

purportedly enable users to trade so-called PRC-20 tokens8 offered and sold for trading on 

PulseChain.  At pulsex.com, Heart instructed investors on how to invest in PulseX by depositing 

crypto assets in exchange for PLSX, the PulseX platform’s anticipated native token, to be delivered 

to investors when PulseX launched.  Heart sold PLSX tokens to PulseX investors, including U.S.-

based investors, between December 29, 2021 and February 26, 2022 (the offering period was 

unofficially extended until approximately April 6, 2022 to allow Heart to continue to accept 

investor assets) (the “PulseX Offering Period”).  Heart pooled each investor’s deposit of crypto 

assets in the PulseX Sacrifice Address (“PulseX SA”).  There have been more than 120,000 

deposits totaling over $676 million in multiple crypto assets to the PulseX SA.  This amount 

excludes any deposits of Hex tokens to the PulseX SA, which, as discussed in paragraph 37 above, 

may have been held by Heart or other insiders.   

68.   PulseX.com states that PulseX will work like Uniswap and that “every time people 

swap from one coin to another on PulseX, [liquidity] providers earn fees as a reward” in the form 

of PLSX.   

                                                           
8 PRC-20 is a protocol, designed by Heart and his developers, that governs how the PulseChain network functions. 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 21 of 27 PageID #: 21



22 
 

69. On or about May 12, 2023, Heart deployed PulseX and investors received their 

PLSX tokens. 

b. Heart Emphasized that Investors Would Profit from PLSX Tokens and 
Directly Tied their Value to the Development and Success of PulseChain and 
PulseX 

70. The pulsex.com website states that “PLSX is designed to increase in value.”  During 

a January 23, 2022 YouTube livestream, Heart claimed that in PulseX, “we have the coolest, 

highest liquidity automated market maker exchange.”  Earlier, in December 2021, Heart stated that 

he believed PLSX tokens would appreciate and that “10,000x in two years is well within the realm 

of possibility.”  On April 26, 2022, Heart told one prospective New York City investor via 

Telegram chat that “PulseX is an exchange online where you can swap all kinds of coins on the 

PulseChain.”  He claimed that “22% of the fees are used to buy and burn the PLSX token so 

basically owning PLSX is similar to owning part of an exchange.”  In the same chat, Heart 

provided the prospective New York investor with step-by-step instructions on how to purchase 

crypto assets, and then how to transfer those to PulseChain and swap those tokens on PulseX.   

71. On the January 23, 2022 YouTube livestream referenced in the previous paragraph, 

Heart also touted PulseX’s success, claiming that it had secured about $1 billion in investments 

(“sacrificed” crypto assets).  All PulseX investor funds flowed through the PulseX SA, a wallet 

address that Heart provided to developers.  Overlapping with the PulseChain release, on March 11 

and 12, 2023, over $100 million of PulseX investor funds (nearly 25% of the total crypto assets 

raised, excluding Hex tokens), were transferred to a privately held wallet (“Private Wallet 2”).  It 

appears as if Heart directed this transfer and controls Private Wallet 2. 

72. Heart actively directed development efforts for both PulseChain and PulseX and 

paid a team of developers.  Heart tied the launch of PulseX and PulseChain to an increase in profits 

for Hex, PulseChain, and PulseX investors.  Heart noted that the investments of Hex tokens during 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 22 of 27 PageID #: 22



23 
 

the PulseX offering removed hundreds of millions of dollars of Hex tokens from the circulating 

supply.  As a result of this reduced supply of Hex tokens in circulation, Heart stated his purported 

belief that the price of the Hex token would appreciate.  Further, in a December 24, 2021 YouTube 

livestream, Heart opined that, “I think Hex on Pulse is going to be more valuable than Hex on the 

Ethereum network.” 

73. Neither Heart nor PulseX has ever registered the PulseX Offering with the 

Commission.   

V. Heart Often Repeated False Claims that His Offerings Were Not Securities 
Offerings. 

 
74. Although Heart frequently made superficial disclaimers about the status of his 

offerings under the U.S. securities laws, the economic reality of these offerings—and his 

promotions of the offerings—were contrary to these disclaimers. 

75. In reality, as Heart has admitted, he sold Hex, PulseChain, and PulseX as potential 

avenues to investor wealth, and the success of these endeavors were completely dependent on his 

efforts (and/or the efforts of others), and not on the efforts of the investors themselves.  For 

example, on a January 16, 2022 YouTube livestream, Heart went through a list of incomplete tasks 

and development milestones that he and his developers needed to complete before PulseChain 

could be released.  He also touted the development milestones he had already attained, including 

a months-long testing phase for features that had already been implemented in the testing space.  

In an October 8, 2022 YouTube livestream, Heart commented in response to requests for updates 

on the PulseChain and PulseX launch, “So, you ain’t getting any updates.  It’s done when it’s done.  

Software is hard.  The [developers] are working hard on it.  That’s all there is to it.  You got to 

wait, just like I’m waiting, except I don’t cry and moan while I wait.” 

 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 23 of 27 PageID #: 23



24 
 

VI. Current Status 

76. As of June 30, 2023: (a) Hex’s price was $.008841, down from a high of $0.56 in 

September 2021; (b) PLS’s price is $0.0001024, down from a high of $0.0003193 on May 22, 

2023; and (c) PLSX’s price is $0.00003112 down from a high of $0.000136 on May 22, 2023.  At 

present, PLS and PLSX are practically worthless, and Hex’s value has dropped about 98.4% below 

its all-time high.  

CLAIMS FOR RELIEF 

FIRST CLAIM FOR RELIEF 
 

Fraud in Connection with the Purchase or Sale of a Security 
 

Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules  
10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)]  

 
Against Defendants Heart and PulseChain 

77. Plaintiff re-alleges and incorporates paragraphs 1 through 76 of this Complaint by 

reference as if set forth verbatim in this Claim. 

78. By engaging in the acts and conduct alleged herein, Defendants Heart and 

PulseChain have, directly or indirectly, in connection with the purchase or sale of a security, by 

the use of any means or instrumentality of interstate commerce, or of the mails or of any facility 

of any national securities exchange, knowingly or with severe recklessness:  

a. employed a device, scheme, or artifice to defraud; and/or 

b. engaged in an act, practice, or course of business which operated or would 

operate as a fraud or deceit upon any person. 

79. By reason of the foregoing, Defendants Heart and PulseChain violated, and unless 

enjoined will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rules 

10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)].  

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 24 of 27 PageID #: 24



25 
 

SECOND CLAIM FOR RELIEF 
 

Fraud in the Offer or Sale of a Security 
 

Violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act  
[15 U.S.C. §§ 77q(a)(1) and (3)] 

 
Against Defendants Heart and PulseChain 

 
80. Plaintiff re-alleges and incorporates paragraphs 1 through 76 of this Complaint by 

reference as if set forth verbatim in this Claim. 

81. By engaging in the acts and conduct alleged herein, Defendants Heart and 

PulseChain, in the offer or sale of a security, by the use of any means or instruments of 

transportation or communication in interstate commerce or by use of the mails, directly or 

indirectly, have: 

a. knowingly or with severe recklessness employed a device, scheme, or 

artifice to defraud; and/or 

b. knowingly, recklessly, or negligently engaged in a transaction, practice, or 

course of business which operated or would operate as a fraud or deceit upon the purchaser. 

82. By reason of the foregoing, Defendants Heart and PulseChain have violated, and 

unless enjoined will continue to violate, Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. 

§§ 77q(a)(1) and (3)]. 

THIRD CLAIM FOR RELIEF 
 

Securities-Registration Violations 
 

Violations of Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)] 
 

Against all Defendants 
 

83. Plaintiff re-alleges and incorporates paragraphs 1 through 76 of this Complaint by 

reference as if set forth verbatim in this Claim. 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 25 of 27 PageID #: 25



26 
 

84. By engaging in the acts and conduct alleged herein, Defendants directly or 

indirectly: 

a. made use of the means or instruments of transportation or communication in 

interstate commerce or of the mails to sell, through the use or medium of any 

prospectus or otherwise, securities as to which no registration statement was in 

effect; and/or 

b. for the purpose of sale or delivery after sale, carried or caused to be carried 

through the mails or in interstate commerce, by means or instruments of 

transportation, securities as to which no registration statement was in effect; 

and/or 

c. made use of means or instruments of transportation or communication in 

interstate commerce or of the mails to offer to sell, through the use or medium 

of any prospectus or otherwise, securities as to which no registration statement 

had been filed. 

85. There were no applicable exemptions from registration. 

86. By engaging in the conduct described above, Defendants have violated, and unless 

enjoined will continue to violate, Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) 

and (c)]. 

PRAYER FOR RELIEF  
 

WHEREFORE, the Commission respectfully requests that the Court enter a judgment:  

1. Permanently enjoining Defendants Heart and PulseChain from violating Section 

17(a) of the Securities Act [15 U.S.C. § 77q(a)] and Section 10(b) of the Exchange Act [15 U.S.C. 

§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 26 of 27 PageID #: 26



27 
 

2. Permanently enjoining all Defendants from violating Sections 5(a) and 5(c) of the 

Securities Act [15 U.S.C. §§ 77e(a) and (c)]; 

3. Permanently barring Defendants from participating, directly or indirectly, in the 

purchase, offer, or sale of any crypto asset security, or engaging in activities for purposes of 

inducing or attempting to induce the purchase, offer, or sale of any crypto asset security by others;  

4. Ordering Heart to disgorge, jointly and severally with each of Hex, PulseChain, and 

PulseX, all ill-gotten gains received as a result of the violations alleged herein, plus prejudgment 

interest on those amounts, pursuant to the Court’s equitable powers and Sections 21(d)(3), 

21(d)(5), and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)]; 

5. Ordering the Defendants to pay civil penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 

78u(d)(3)]; and 

6. Imposing such other and further relief as the Court may deem just and proper. 

 
Dated:  July 31, 2023    Respectfully submitted, 

        
/s/ Matthew J. Gulde    
Matthew J. Gulde 
Illinois Bar No. 6272325 
United States Securities and  
Exchange Commission 
Burnett Plaza, Suite 1900 
801 Cherry Street, Unit 18 
Fort Worth, TX  76102 
Telephone:  (817) 978-3821 
Facsimile:  (817) 978-4927 
[email protected] 
 
ATTORNEY FOR PLAINTIFF SECURITIES 
AND EXCHANGE COMMISSION 

  
 
 

Case 1:23-cv-05749   Document 1   Filed 07/31/23   Page 27 of 27 PageID #: 27