SEC sues entrepreneur, alleging $1 billion in unregistered crypto sales and multimillion-dollar fraud

The Securities and Exchange Commission on Monday filed charges against a U.S. citizen it alleged raised more than $1 billion through the unregistered offer and sale of crypto securities before pilfering millions to fuel a high-status lifestyle and the acquisition of luxury goods, including the largest black diamond in the world.

Richard Schueler, also known as Richard Heart, operated three crypto-asset offerings: Hex, PulseChain and PulseX. The SEC alleged he touted the investments as a “pathway to grandiose wealth.”

The offerings were made through Hex tokens, which were marketed as an ethereum-based “Certificate of Deposit.” But the SEC alleged that the 38% annual return that Schueler touted was nothing more than cover for an elaborate scheme.

Schueler faces three charges of securities fraud in civil court.

Schueler, who was born in the United States but resides in Finland, surreptitiously defrauded his investors, the SEC alleged, by generating hundreds of millions of dollars worth of wash trading activity on his platforms, “creating the false impression of significant trading volume and organic demand for Hex tokens.”

Schueler misappropriated at least $12 million of investor funds, the SEC alleged, to purchase a 555-carat black diamond, high-end vehicles, and luxury watches. A $550,000 Rolex Daytona, an $800,000 Rolex GMT Master II and another unspecified $1.38 million Rolex watch were among his watch purchases, the SEC said.

In March, Schueler began to pare back his social media presence, deactivating his Instagram profile to “show more humility and respectfulness.”

The charges against Schueler were filed in the Eastern District of New York.