Overview

The Securities and Exchange Commission (SEC) has filed charges against a U.S. citizen for allegedly raising over $1 billion through the unregistered offer and sale of crypto securities. The individual, Richard Schueler, is accused of using the funds to finance a lavish lifestyle, including the purchase of luxury goods such as the world’s largest black diamond.

Details

Schueler operated three crypto-asset offerings named Hex, PulseChain, and PulseX. The SEC claims that he promoted these investments as a “pathway to grandiose wealth.” The offerings were made through Hex tokens, which were marketed as an Ethereum-based “Certificate of Deposit.” However, the SEC alleges that the promised annual return of 38% was merely a cover for a complex fraudulent scheme.

Legal Consequences

Schueler now faces three charges of securities fraud in civil court. The SEC asserts that he defrauded investors by generating fake trading activity on his platforms, deceiving them into believing there was significant demand for Hex tokens. It is alleged that Schueler misappropriated at least $12 million of investor funds to buy extravagant items like a 555-carat black diamond, high-end vehicles, and luxury watches. Notable watch purchases include a $550,000 Rolex Daytona, an $800,000 Rolex GMT Master II, and another unspecified Rolex watch worth $1.38 million.

Changing Social Media Presence

In an attempt to display “humility and respectfulness,” Schueler deactivated his Instagram profile in March.

Legal Proceedings

The charges against Schueler were filed in the Eastern District of New York, Case 1:23-cv-05749.