Richard Heart, a prominent figure in the cryptocurrency realm, is facing allegations from the US Securities and Exchange Commission (SEC) for purportedly utilizing proceeds obtained from the sale of unregistered securities to procure the illustrious 555-carat Enigma diamond.
Heart, originally known as Richard Schueler and renowned as the creator of the Hex cryptocurrency token, has been charged by the SEC with orchestrating the sale of securities, amassing over $1 billion from investors. The commission asserts that Heart and his company, PulseChain, engaged in fraudulent activities by allegedly diverting at least $12 million of these funds for the acquisition of luxury items, which encompassed high-end automobiles, timepieces, and notably, the Enigma diamond.
Eric Werner, the director of the SEC’s Fort Worth regional office, condemned Heart’s actions, stating, “Heart called on investors to buy crypto asset securities in offerings that he failed to register. He then defrauded those investors by spending some of their crypto assets on exorbitant luxury goods.”
The Enigma diamond, distinguished by its exceptional 555-carat weight and rumored extraterrestrial origin, holds the distinction of being the most substantial faceted diamond ever to grace the auction stage. Heart’s acquisition of the diamond transpired through a distinctive sale conducted by Sotheby’s in February 2022, amounting to GBP 3.2 million ($4.3 million). In a social media post, Heart announced the acquisition, expressing intentions to christen the gem as the “Hex.com diamond,” an homage to his cryptocurrency platform, signifying a symbolic alignment between the precious stone and his digital venture.
This purchase also coincided with Heart’s establishment of the “5555 day club” within the Hex community, comprising individuals who held 5,555-day Hex stakes, representing the longest feasible stake duration in the electronic token.
It is important to note that Sotheby’s, the esteemed auction house facilitating the sale, has not been implicated as a defendant in the SEC’s legal proceedings. In response to inquiries, Sotheby’s communicated its adherence to due diligence protocols aligned with regulatory prerequisites.
“While Sotheby’s refrains from commenting on specific transactions, we affirm the implementation of rigorous due diligence measures, tailored to meet our obligations for conducting business in full conformity with pertinent laws and regulations,” the auction house articulated in a statement.
