The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Richard Heart, the producer of altcoin Hex, alleging that it raised over $100 million from investors through an unregistered and fraudulent securities offering.
The SEC also alleges that Heart used some of its investor funds to purchase a $25 million black diamond known as “The Enigma.”
Heart launched Hex in December 2019 as a “high-interest blockchain certificate of deposit” promising investors high returns through a complex staking mechanism, according to the SEC's complaint in the U.S. District Court for the Southern District of New York on Monday.
The SEC claims that Heart is marketing Hex as a better alternative to Bitcoin and other cryptocurrencies and is “designed for 10,000x returns.”
According to data from CoinMarketCap, the price of Hex plunged sharply after the news of the lawsuit, dropping by nearly 25% from its bottom to $0.006179. Hex price, which partially recovered at the time of this writing, is trading at $ 0.007379.
Some crypto analysts and watchers welcomed the SEC's action against Hex, saying it was an example of scam projects the agency should be targeting. Bloomberg Intelligence analyst James Seyffart tweeted:
“While I don't really like the project (and I honestly think it has a lot of securities-like features), I may have backed Ripple to win the case. But I will be 100% pro-SEC in this case. This is the kind of project the SEC should have pursued years ago.”
*Not investment advice.