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Richard Heart’s Hex Token is a Brilliant Scam

Richard Heart’s Hex Token is a Brilliant Scam
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Updated on September 24th, 2021

Is hex crypto a scam? Definitely, and I will explain in detail as to why throughout the following sections.

Hex.com should go down in the crypto textbooks as one of the greatest cryptocurrency scams in history because it is brilliantly executed and marketed. There are a lot of features of it that entice others to buy in for quick returns and then turn around and promote it to others. It’s also the only cryptocurrency that I have ever heard of to market ads in magazines, buses and taxis trying to bring in a whole new class of victims outside the regular cryptocurrency investors.

99% of cryptocurrencies are scams, so there isn’t really anything new here. But since this scam is marketed to a lot of people outside the cryptocurrency circles, and even a friend of mine put money in it, after researching what it was all about, I was amazed at how much it was carefully crafted to make the founder rich, entice others to buy in and not sell, and attempt to avoid legal scrutiny.

Get Rich With Hex Media Blitz

More on Richard “Heart” later
Advertising in the Economist Magazine. Source: Twitter
Hex on Buses
Advertising on Taxis

What Is Hex Crypto?

Hex is a token on the Ethereum network executed by a smart contract and the website advertises itself as a place to earn 40% per year with “certificates of deposit.”

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You think that the 40% per year “interest” is your first clue that this is a scam?

Hex.com claims that two different auditors have audited the contract. But what does that really mean? To a layman, they might think that the statement means that a professional auditor like PricewaterhouseCoopers came in and reviewed it and found out it’s not a scam, or something to that effect.

But that’s not what it means. Auditing in crypto-land is evaluating the computer code for bugs. Having sound code doesn’t absolve it from being a scam if the code is written to be… a scam.  

Hex bears a lot of similarities to the Bitconnect Ponzi scheme that failed in 2017. In fact, it’s almost as if the scammer behind Hex used Bitconnect as a springboard to make an improved scam. Hex has been very careful with marketing language and product design features to both appear legitimate and to avoid legal trouble.

The website even has an entire page on Hex dedicated to why the product isn’t a scam and generously educates the reader on what technically constitutes an illegal Ponzi scheme and a Pyramid scheme and why this product doesn’t qualify.

Usually legitimate investment products don’t need an entire section educating you on scams and why their product doesn’t meet the technical requirements.

I think this page is actually targeted towards any SEC or financial authority law enforcement officer that happens to come across the product rather than everyday readers.

It may not fit the legal definition of a Ponzi or Pyramid scheme only because this is the first time in history that the schemer has controlled the seigniorage that victims were receiving as interest. The scam wouldn’t work if the advertised returns had to be paid in any other asset that Hex didn’t control.

And none of the Hex scam rebuttals negate the fact that the whole premise requires luring others to buy in.

Who Founded Hex?

The founder who goes by Richard Heart for marketing (his real name is Richard J Schueler). There’s nothing wrong with using a pen name except when the point is to hide a long history of shady businesses involved in spamming Viagra and anti-aging pills (which he was successfully sued for in the early 2000s) and legal trouble in Panama.  

He was even spamming courses on “how to spam” and avoid paying taxes on the spamming earnings. Fear of Missing Out (FOMO) is a great sales tactic that Richard Schueler uses continuously in everything he is involved with. Here in 2003 he offers up that he was a 23 year old multi-millionaire from spamming.

Furthermore his own blog documented other shady businesses such as selling stereo equipment he didn’t own and then turning around and giving the buyer sub-par equipment.

He has had a pretty public persona for the last few years doing podcasts, interviews and publicly challenging others about their involvement in cryptocurrency. Ironically, he has called basically anything other than Bitcoin a scam, but changed his tune and decided he wanted to cash in.

Does a scammer ever reform, or are they always out looking for their next mark?

It is no surprise that since the crypto world is like the Wild West, that he would have gravitated to this space to enrich himself.

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And enrich he has. Another one of the ways he promotes his product is by flashing his riches and comically attributing the success to his own product.

Well, yeah, Hex.com has been amazing for HIM. Bernie Madoff’s scam business was amazing for him and early investors as well for dozens of years.

What Is Interest?

When banks offer certificates of deposits they refer to federally insured bank notes and the saver is required to lock those funds up for an agreed amount of time to receive a higher rate of interest. The bank offers these because they can plan better around their federally mandated reserve requirements and lending portfolio.

The Hex “certificate of deposit” is based on a smart contract on the Ethereum blockchain that follows a programmed set of rules. Similar to banks, the longer you lock up your funds, the higher your interest rate is.

But that’s where the similarities end.

To participate in Hex certificates of deposit, you send Ethereum to Richard Schueler’s “origin address” and in exchange he gives you Hex tokens (there are now liquidity providers (DEXes) that offer Hex for trade on the secondary markets, but no regular exchange offers it as of this writing). When you lock up your Hex tokens, you get more Hex tokens later.

Do you see where this is going?

This whole scam could not work if the requirement was to lock up an asset and get paid interest in that asset for an asset that Richard Schueler didn’t control.

What Is the Hex Interest Based on?

When banks give you interest, it stems from economic activity. The bank takes your money, loans it out, gets a return on the money, and then pays you part of that return. A commercial bank’s business model is to capture a spread between short term and long term interest rates. They borrow short, and lend long. That’s the core of their business and why they offer savings and checking accounts in the first place: They leverage other people’s money.

With Hex, there is no underlying economic activity happening at all. It’s not even real interest.

All the Hex contract code does is mint new inflationary tokens every year and then distributes the inflation to those who have agreed to lock up their Hex tokens. Those who lock up tokens also get half the penalties for those who unlock their funds early, or get this, forget to unlock their funds within two weeks of the agreed upon period. Richard Schueler generously gets the other half.

The inflation does not stem from computer work in the form of electricity like in the case of Bitcoin.

Everything else being equal, your expected return from being paid inflation is 0%.

I can cut up a sandwich into smaller pieces and give it back to you and you still don’t have a bigger sandwich.

You can agree to buy a $1,000 worth of arcade tokens and earn additional arcade tokens, but if the games are increasing at the same rate you are supposedly earning you haven’t earned anything. Furthermore, what if the arcade owner then tells you that you have to go to the street and sell your tokens to someone else if you want to convert your tokens back to dollars.

Would you take that deal?

Richard Schueler could have written the smart contract to say that every year a zero will be added to every locked wallet balance. Does that actually make you 10x richer? No.

Your balance of Hex tokens may be growing but that doesn’t translate into real earnings when you have to convert back to dollars in several years time.

Why Is The Interest Rate 40%?

It’s marketing based on an assumption of the contract code.

The 40% number comes from the requirement that only people who lock up their funds get paid inflation and an assumption that only about 10% of Hex token buyers will lock up their funds. The inflation rate is 3.69% arbitrarily, for undisclosed reasons.

Why would only 10% of token buyers lock up their funds when the whole point of buying Hex would be to lock it up and get the purported 40% annual interest? As more people lock up their tokens, the lower the reward will become. And if everyone locks up their tokens, then everyone would get 3.69%, but also losing 3.69% to inflation.

Fool’s gold is not turning into real gold here.


The general staking concept where holders lock up their tokens for a period of time is the norm with newer Proof of Stake styled cryptocurrency tokens. Older cryptocurrencies like Bitcoin and Ethereum require millions of computers (i.e. ASICs) running specialized number guessing hardware all competing against each other to secure the network. It uses up an enormous amount of electricity.

In contrast, staking is a newer, more energy efficient methodology whereby other people’s datacenters are voted on by each staker. The staker needs to research the datacenter to make sure that it doesn’t behave badly, and doesn’t have long periods of inactivity, because if it does, the staker’s money will be slashed. Therefore, it is a decentralized way for people to put money where their mouth is and as a reward, they earn a portion of the datacenter’s fees from processing those transactions.

When you stake with Hex, you aren’t securing a network or facilitating any underlying economic activity. You are just agreeing to lock up your funds so that there won’t be selling pressure. What a convenient product feature.

Scam Dynamics

See the brilliant part of this scam is the underlying economics of it. He is reducing supply by encouraging users to lock up their funds and at the same time increasing demand through marketing and referral programs. Both will increase the price of Hex until either the SEC shuts him down or Hex runs out of buyers.

How It Starts

You send Ethereum to the contract address, known as the origin address, and you are sent Hex tokens. If you want to change your Hex tokens back to Etheruem, you have to go to go somewhere else. You don’t get a refund from Schueler’s origin address. He keeps everything you send him, scot-free and if you want out, then you are on your own to find an exchange offering liquidity.

From the bottom of the Disclaimer page:

The “origin address”, aka Scheuler’s personal wallet, has a lot of shenanigans in the way it was designed to make him rich. Read this article for an in-depth look at the protocols in the code that directly funnels money to his own wallet address.

In interviews he always dodges the question of who owns the “origin address” that receives Ethereum and also receives half the penalty for people who unstake early or late. Likely the reason why he will not answer that question is because he could get in legal trouble for having a year round ICO (which was deemed a security by the SEC) and he probably also wants it to appear to the user base that he isn’t personally benefiting from this scam or that the origin address somehow benefits the Hex token.

About $7 million of Ethereum was withdrawn from that origin address about a month after launch. It was conducted with 36 transactions of 1,337 ETH. 1337 is “leetspeak” for leet, which means “elite.” Hackers in the 1990s referred to others as elite if they had the best hacking skills being able to infiltrate corporate servers and websites. To me this looks like a cocky message basically bragging about how he bilked millions of dollars out of suckers.

Also, there’s nothing stopping Richard Schueler from creating a continuous loop by sending Ethereum to the origin address, receiving Hex, then sending the received Ethereum to a different address (through a laundering mixer), and then sending it right back to the origin address for more Hex. He can mint himself as much Hex as he wants. How are people not seeing how much of a scam this is?


It started with lots of marketing through traditional print and online media as I showed at the beginning of this article. As stated before, this is unusual for a cryptocurrency project to advertise because search engines usually outright ban any advertisements related to crypto and print media is expensive.

The original name of the project was called “BitcoinHEX.” Remember in the previous article how I stated that usually crypto scammers seek to exploit name recognition and legitimacy by using another crypto’s name? Hex has absolutely nothing to do with Bitcoin, since it is built on the Ethereum network. But people have probably heard of Bitcoin so he wanted to give the allure to newbies that it was somehow related.


No scam would be complete without advertising how rich people are getting along with some Lambo shilling. In addition to a bunch of exotic cars purportedly paid for with Hex winnings, there is a whole cache of items on the webpage. Clearly this is a marketing technique to bring in buyers want to get rich quick.

Instant User Base

To get it started with an instant user base, Richard Schueler offered free Hex tokens to anyone who had Bitcoin by a deadline and then submitted a claim to the website. As I also mentioned in my previous article, it’s much easier to grow a community when you instantly mint thousands of people who didn’t have do actually commit any new money to be a part of it. And since those Hex tokens were minted out of thin air, it didn’t actually cost him anything to give them out.

Shortly after launch he could claim that thousands of people have staked Hex in his “certificates of deposit” even though they didn’t put a dime into them. People are herd animals and feel more comfortable if there are lots of other people already involved in a product.

Adoption Amplifier & Referral Program

Schueler incentivized people to “act fast” to get a bonus.

And users are incentivized to bring in others through their referral program. Your users become your marketing shillers for free. A few websites started up Hex affiliates just for the purpose of getting the 20% referral. They didn’t have to commit any of their own money to shill the product and earn.

Supply Reduction

This is really the crux of the brilliance of this scam.

By incentivizing Hex buyers to lock up their tokens for a number of years, it removes selling pressure and reduces the float. It’s like Hotel California: Your money checks in, but doesn’t check out.

Because the earliest investors will be locking up their stakes, it will be easier to manipulate the price upwards solely by advertising and luring in new people to buy. The goal of course is to create so much FOMO that the price will skyrocket so that even more people will be lured in. Early investors in Ponzi and pyramid schemes usually make money along with the pinnacle scammer and they will defend it without bounds.

Disclaimers: Covering His Ass

Hex was carefully crafted to avoid the various legal tests of typical pyramid or Ponzi scams. For instance, it can’t be considered a multi-level marketing program because it only has one level of referrals built in. Hex also doesn’t promise returns, it says that its returns are “designed by the code.”

If you cruise over to the very bottom of the page, you will see the disclaimers page. Richard Schueler has put in copious amounts of disclaimers in an attempt to thwart any legal trouble he is getting himself into.

It’s not a security, I swear!

I’m not selling you anything, it’s just code out on the block chain!

Whether he states if it is a security or not does not ultimately constitute what a legal authority will eventually rule what it actually is, but it looks like he is attempting to thwart the SEC from coming knocking by carefully explaining why it doesn’t adhere to their tests.

He can’t deny that he is receiving an asset and trading it for another asset of his own product, but anytime anyone brings up who controls the origin address that receives the funds he will dodge the question. Likely his lawyers have educated him that if he is the one receiving the funds then it’s an ICO.


Watch a few Youtube videos of him getting interviewed by someone critical of Hex.

Not only does Richard Schueler get defensive and start name calling, his response is to ask a question of why Hex can’t be thought of just like Bitcoin?

Well what innovation does Hex add to the table aside of being a self enrichment scam? Bitcoin solved a double spending problem for digital money and didn’t require sending the founder money to participate. What does Hex solve?

Schueler just saw that other scammers were getting rich creating scam-coins and wanted in on the action.

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Hex distribution

The distribution of Hex shows that it is highly centralized. This shouldn’t be a surprise given how easy it is for Richard Schueler to mint himself tokens through the origin address. In an effort to pretend that there are more investors than there really are, the distribution of tokens strongly suggests that Richard Schueler created a huge number of wallet address.

Etherscan provides a tool to look at the top 500 token holders. I find it odd that almost all of them were created on the same day, within the same hour. Furthermore, there is a whole block of accounts that all have the same exact amount.

I guess there just happened to be a lot of whales who all had the same amount and created Hex accounts on the same day…. Hmmmm.


The game theory dynamics involved in this scam are well thought out to avoid being placed in a legal category of a pyramid scheme or a Ponzi scheme and designed to keep people in like the roach motel. You send your money in, but don’t get your money out. It’s the most blatant scam coin where it is written right into the contract that the founder gets half of all penalties and fines and can mint as much as he wants for himself.

Anyone who buys into this scam will feel supremely confident about their balance until the day it falls apart. There might be a balance in your wallet, but can you actually convert that to dollars in the future?

And not unlike other cryptocurrencies, it requires bringing in a new set of buyers to keep the price from plummeting when those who unlock their stakes do sell. Will the future tide of buyers be enough to overcome the inflation and self enrichment scam by Richard Scheuler? Only time will tell.

A rising price for the Hex token does not absolve its short comings or prove that it isn’t a scam. Lots of crypto tokens have increased rapidly and people throw money all over the place only because of price appreciation. It’s a self fulfilling prophecy.

Early investors in every scam do well at the expense of later investors, and those early investors will promote and defend the product to no end because of all the money they are making from it. It’s no different here and you can see the Hex shill army attacking anyone critical of it all over social media. It’s almost like a cult.

People also thought that they were getting rich with Bitconnect until the bottom fell out one day.

You are being Punk’d.

Cryptocurrency isn’t going away. Check out eToro by reading my review here or going straight to their site.

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After graduating with $75,000 in student loan debt, Ryan began a professional career in finance, aggressively saved and invested and became a self-made millennial millionaire in early 2019. He holds a Master's degree in Computational Finance, a Master's degree in Economics, and a Bachelor's degree in Mathematics. His two passions are investing and traveling.

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