Richard Heart’s $26 Million Tornado Cash Transactions Raise SEC Suspicions

The US Securities and Exchange Commission (SEC) has filed a complaint against Richard Schueler, also known as Richard Heart, alleging that he raised over $1 billion in unregistered securities offerings from retail investors in the United States and abroad.

The SEC claims that Heart operated through three unincorporated alter-ego entities, Hex, PulseChain, and PulseX, and engaged in three separate offerings since December 2019.

Per the complaint, each offering was a crypto asset security, and PulseChain and PulseX were platforms designed, created, and maintained by Heart.

Between December 2019 and November 2020, Heart accepted more than 2.3 million ether from investors, worth over $678 million at the time of deposits, and issued Hex tokens to investors.

However, the SEC claims that 94-97% of these deposits were “recycling” transactions directed by Heart or other insiders, which enabled them 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.

The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains, plus prejudgment interest, and civil penalties to protect the public from further harm and fraudulent activity.

Tracing Millions Of Dollars Through Tornado Cash

The cryptocurrency community has been abuzz with news regarding Richard Heart and his alleged involvement in the ownership of a significant portion of DAI, a stablecoin issued by MakerDAO. Recently, Conor Grogan, the Director of Institutional Sales at Coinbase, took to Twitter to shed further light on the matter.

According to Grogan, Richard Heart-connected wallets, including those associated with PulseX/Pulsechain, currently own at least $703M of DAI, which represents 15.5% of all DAI outstanding.

Furthermore, the Securities and Exchange Commission has made allegations that a wallet connected to Richard Heart holds $35M in DAI and has sent $26.9M through Tornado Cash, a privacy-focused tool for Ethereum transactions.<

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Author: Ronaldo Marquez

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