Nuthawut Somsuk/Getty Images
- The Securities and Exchange Commission has cracked down on the cryptocurrency industry this year.
- This week, it filed charges against a crypto entrepreneur accused of illegally raising $1 billion in offerings of unregistered securities.
- Richard Schueler, aka Richard Heart, then used millions of his clients' money on "exorbitant luxury goods", per the SEC.
The Securities and Exchange Commission has just charged a crypto entrepreneur with illegally raising over $1 billion in unregistered token offerings, before splurging over $12 million of that on luxury goods for himself.
Richard Schueler, known online as Richard Heart, spent customer funds on luxuries such as a white Ferrari Roma and rare Rolexes including a $550,000 Daytona "Eye of the Tiger" and a $800,000 GMT-Master II, according to the SEC lawsuit.
But the most unconventional of all Schueler's purchases may be a billion-year old black diamond, nicknamed "the Enigma", that may have come from space.
Before it all came crashing down in March, Schueler ran three unregistered securities: Hex, PulseChain, and PulseX. Per the SEC's lawsuit, Heart continually touted his investments as a pathway to "grandiose wealth", declaring that Hex, for example, "was built to be the highest appreciating asset that has ever existed in the history of man."
"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," the regulator said in the lawsuit.
Furthermore, "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," it added.
The SEC is on the warpath against the crypto sector this year. In the first half of 2023 alone, it sued Binance for running an illegal exchange, accused Sam Bankman-Fried and his executives of paying themselves multi-million dollar bonuses, and engaged in a lengthy suit to determine whether XRP tokens could be deemed proper securities (they weren't, the court ruled). It also charged Gemini, Genesis, Tron, Bittrex, and the company behind TerraUSD.
"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," the regulator said.
SEC chair Gary Gensler last week called the cryptocurrency world "rife with fraud, rife with hucksters", as he roots out some of the worst crimes in the embattled sector.
And the "Enigma" diamond is not the first example of bizarre crypto-bro splurging. Last month, Insider reported that Sam Bankman-Fried's brother, Gabriel, signaled his intention to purchase the island of Nauru – just in case the world was to end.