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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 January 14th, 2022

Is Hex crypto a pyramid scheme? No. Is Hex crypto a Ponzi scheme? Not in the SEC pre-crypto defined legal sense. But don’t let that fool you into thinking that Hex is a legitimate investment product.

The Hex.com token should go down in the crypto textbooks as one of the greatest cryptocurrency scams in history because it is heavily marketed, has a large shilling army, has a ‘hook’ to draw in investors, and its main product feature is to create resistance to getting out of it.

99% of cryptocurrencies are scams, so there isn’t really anything new here, but most cryptocurrencies sell themselves to average crypto speculators as being some utility token for an ecosystem that is going to be the next great thing (which rarely ever pans out). These buyers are generally aware that they are gambling, and that is fine if they accept that.

Hex is different because it’s being sold as an investment furnishing returns, uses bank terminology, and is heavily marketed to the masses who haven’t gotten on the crypto train yet. It’s the only cryptocurrency that I have ever heard of to use ads to market in magazines, buses, taxis, physical mail and TV trying to bring in a whole new class of victims outside the regular cryptocurrency speculators. We’ll show some examples in a later section.

What Is Hex Crypto?

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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.”

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

Wait until we dig into the details.

Hex has been very careful with the marketing language on the website and product design features to both appear legitimate and to avoid legal trouble.

There is even an entire page on the Hex token 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 legally qualify.

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

This page might actually be targeted towards the SEC or another financial authority law enforcement officer that happens to come across the product, to dissuade them from launching an investigation because it doesn’t fit neatly into their predefined 1920 rules of Ponzi or Pyramid schemes.

Crypto is largely unregulated at this point in time so a lot of sketchy stuff continues to exist out in the world and with contracts being decentralized, it’s hard to squash them out.

Hex Volatility

Hex is just like any other a volatile cryptocurrency, unlike a typical bank CD priced in dollars where your investment principal doesn’t change. Here’s a clue that “Certificate of Deposit” is a poor naming choice for Hex because in a CD it is impossible to lose money:

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Your investment principal is subject to wild fluctuations


Since Hex is marketed to lots of everyday people, I want to make a distinction about what an audit on a cryptocurrency smart contract means, since Hex mentions frequently in its marketing materials that three different auditors have audited its contract.

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 the crypto world is where developers who specialize in cryptocurrency smart contracts evaluate 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.

Get Rich With Hex Media Blitz

Hex has been successful in convincing enough new buyers to drive up the token price since inception through its highly aggressive marketing tactics.

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Advertising in the Economist Magazine. Source: Twitter
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Hex on Buses
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Advertising on Taxis
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Hex Ad in Subway
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Video Hex Ad on NYC Truck: Source
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Yes, “someone” did!

Additionally, multiple people have reported receiving physical Hex spam mail to their homes with their names from the Ledger hack (here, here, here, here and here). Creepy, and unethical.

Then watch this comical TV commercial that aired on MSNBC with yachts and money flying around with the spokesman saying “people are getting rich, truly rich” before it even officially launched. Hex is designed to cater to your greed.

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.

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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.

Does a scammer ever reform, or are they always out looking for their next mark? Do you want to put your money in a product created by a conman?

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

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

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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.

Social Media Shill Army

He has had a pretty public persona for the last few years doing podcasts, and showing up to cryptocurrency conferences and harassing presenters about their cryptocurrency backgrounds. For instance, when Craig Wright falsely claimed to be Satoshi Nakamoto (anonymous Bitcoin founder), Schueler, who was sitting in front, very aggressively called him out on this in front of the whole crowd. This led to a big surge in social media followers.

Ironically, he has called basically anything other than Bitcoin a scam until he launched his own offering.

Since his large group of social media followers were the first ones to get into Hex and have the most to gain from its success, his product came with its own army of Hex shillers and defenders, who call themselves ‘Hexicans.’

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Hexicans are a pretty toxic group and seem to take it personally if you say anything bad about Hex. Of course, this makes sense, since if you get in early enough on any scam, you too can make a lot of money at the expense of later investors and you want to protect your pile of gains. They roam around on social media advertising it to others and attacking anyone critical of it, usually in coordinated brigades.

They all seem to parrot each other from the same script: “100% uptime and no middle men!” As if they don’t understand that every token on Ethereum’s platform has had the same 100% uptime and that most tokens don’t have “middle men” either, since that’s the actual point of a smart contract.

They follow the ABC‘s and are always looking for additional ways to market Hex to others, including creating thousands of Twitter accounts and YouTube videos. The odd thing is that they only ever talk about Hex, and all have either Hex logos incorporated into their profile pictures or have Hex as part of their screen names. Are they just bots or cult members? It’s strange.

They are even commissioning a documentary (whose creator recently reached out to me) on Hex and Richard Heart. The funding was only trickling in for the first 50 days until someone (guess who!) contributed about $450,000 in one go, which greenlighted the project. That contributor’s account balance shows more than $330,000,000 in value, 90% in Ethereum.

The Hex Disclaimers

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 or pyramid scheme because it only had one level of referrals built in to the adoption phase.

It doesn’t technically constitute a Ponzi scheme because new investor money isn’t flowing directly to existing investors, but this is something we discuss in a later section.

Hex also doesn’t promise returns, it says that its returns are “designed by the code” as if simply decreeing investment returns could work in the real world.

At the very bottom of the page, you will see the disclaimers page where Richard Schueler has put in a copious amount of them.

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It’s not a security, I swear! They’re just numbers in a database!

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

You do your own work because you are the one pressing the button!

He can personally decree that it is not a security but that does not constitute what a legal authority would ultimately rule on what it actually is if they are even bothering to look.

During The First Year of Hex

The following four parts only applied during the first year of Hex’s existence, but it is important to point them out in order to explain some later points and also to understand the techniques and shenanigans that Richard Heart engages in to get around legal requirements, promote Hex and enrich himself.

The Richard Heart Initial Coin Offering (ICO)

During the first year’s claim period, you obtained Hex by sending Ethereum to the contract address, known as the “origin address.” If you wanted to change your Hex tokens back to Ethereum, you’d have to go somewhere else. Schueler’s origin address offers no refunds, which again refreshes why the term “Certificate of Deposit” is a poor naming choice. He kept everything you sent him, scot-free and if you wanted out, then you had to find an exchange offering liquidity.

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In interviews he always dodges the question of who controls the Hex origin address or he says he doesn’t know who owns it. Well obviously he controls it since its his own smart contract!

The reason why he will avoid that question is because the ICO was deemed a security by the SEC and he conducted an illegal one for an entire year without a filing and registration. He received an asset in exchange for his own creation, it’s an ICO without question. This is just another case where he tries to use obfuscation to get around legal rules.

About $7 million of Ethereum was withdrawn from the Hex 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, during the first year, there was 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 (maybe even through a laundering mixer to obfuscate this activity), and then sending it right back to the origin address for more Hex. He could mint himself as much Hex as he wanted and he did. We’ll talk about how much Hex he owns in a later section.

How could anyone ignore that fact alone and not see how much of a scam it is?

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 to actually commit any new money to be a part of it. Who doesn’t like free stuff? Since these Hex tokens were minted out of thin air and locked for a year, it didn’t actually cost him anything to give them out, but it gave the appearance to outsiders that there was a thriving community with thousands of Hex participants.

Unfortunately people are herd animals and only get comfortable with something when lots of other people are already involved.

Adoption Amplifier & Referral Program

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

And users were 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.

Richard Got a Copy of Adoption Bonus and Referral Bonuses

During the early adoption phase he also got a copy of what everyone else got. In other words, when someone exchanged Ethereum to Hex, Schueler got both a copy of the Hex value and also the full Ethereum value.

Isn’t the point of sending the Ethereum an exchange for the Hex? Why did he get additional Hex too?

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And when someone was referred by another Hex user, he also got a copy of what both the referrer and referree got. Why did he get a copy from other people’s marketing efforts?

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Etherscan Contract Code

In case it’s not obvious by now, each time someone used the adoption method or was referred, it was further dilutionary to the Hex token pool by 2x the claim amount.

It should be pretty obvious the only significant whale in the Hex system is Schueler himself. We’ll come back to this point in a later section.


It’s the never ending story here with this one.

Hex not only has lots of marketing through traditional print and online media as I showed at the beginning of this article, but Schueler also paid for professional press releases to show up on financial news sites with comical claims like “Hex has the potential to eradicate middlemen payment companies such as PayPal and Venmo, as well as impact credit card companies like Visa and MasterCard.”

So which is it, a payment app or a certificate of deposit? In fact, Hex doesn’t have the ability to do any of that because the infrastructure for sending tokens or payments comes not from his token, but the platform his token is built on, Ethereum. It’s simply more grandiose claims to lure in buyers hoping to jump aboard the next Bitcoin, Tesla or transformative technology.

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.

Furthermore, the original name of the project was going to be “BitcoinHEX.” In the previous article I mention 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 basically everyone by now has heard of Bitcoin, and the massive success it has had, so he wanted to give the impression that Hex was somehow related to it to those who weren’t experienced in cryptocurrency.

FOMO: When Lambo?

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 ‘get rich quick’ hopefuls.

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Richard Heart's Hex Token is a Brilliant Scam 20

Supply Reduction

This is really the crux of the brilliance of this scam. It’s like Hotel California: Your money checks in, but doesn’t check out.

The main product feature is to lock up your Hex tokens for a chosen period of time with the rewards increasing along with the lock-up period. Technically, Hex converts to T-shares, which is just a computational efficiency and reduces circulating supply figures, but isn’t germane to the criticisms I make in this article.

However, by incentivizing Hex buyers to lock up their tokens for a number of years, and heavily penalizing them if they unlock early, it removes selling pressure and reduces the float. This provides the opportunity for the marketing efforts to have a more powerful effect, since with more buyers than sellers, the price will be pressured upwards. This, in turn, lures in additional buyers catching the FOMO bug.

The goal of course is to remove as many retail sellers as possible from the process so that the only people who are left to sell are the earliest investors and promoters who have large bags to dump on new entrants. “Longer pays better” because they want to incentivize you to not think about getting your money back until years after you’ve contributed it.

A key point is that early investors in every Ponzi and pyramid scheme make money along with the pinnacle scammer and they will defend the product without bounds to protect their newfound wealth.

Heart’s Use of The Word ‘Staking

We need to discuss Schueler’s use of the word ‘stake’ here when referring to locked Hex 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 and only those who can afford the hardware get the rewards. This is referred to as Proof-of-Work.

In contrast, the staking concept where investors lock up their funds for a period of time is the norm with newer Proof-of-Stake styled cryptocurrencies. It’s democratized as anyone can participate in rewards with any amount of money and is more energy efficient because people bet on datacenters which don’t require random number guessing hardware.

The staker needs to research the datacenter to make sure that it has a legitimate group running it, won’t behave against the interests of the network, 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 to secure a network where people put money where their mouth is, and as a reward, they earn a portion of the datacenter’s fees from processing transactions.

When you ‘stake’ with Hex, you aren’t securing a network, voting on governance or facilitating any underlying economic activity at all. It’s a complete misuse of the term and there is no Proof-of-Stake at all. You are just agreeing to lock up your funds so that there won’t be selling pressure.

What a convenient product feature.

How Does Hex Crypto Make Money?

In short, it doesn’t. This is where we really get to the crux of the Hex scam. Let’s compare two models:

The Banking Model

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.

Banks offer certificates of deposits because they can plan better around their federally mandated reserve requirements and lending portfolio. Everyone is familiar with them: you put in dollars, and you get more dollars back later.

This is how real revenue is generated in the CeFi (and DeFi!) world with other projects such as Anchor Protocol (DeFi), Celsius, Nexo, and BlockFi.

The Hex Model

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 theirs up.

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 and create out of thin air.

Where’s the certificate of deposit that pays 40%, or even 20%, in Bitcoin or Ethereum? It can’t exist.

Those who lock up tokens also get half the penalties from 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 gives himself the other half.

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Etherscan Source Code

So in other words, the sole purpose of the Hex contract is to redistribute value from some token holders to other token holders.

Inflation is Dilutive

Inflation is never a good thing, but in the case of Proof-of-Work (PoW) cryptocurrencies like Bitcoin and Ethereum, it is a necessary evil to incentivize miners to secure the network. You couldn’t have had PoW without it, especially before cryptocurrency became popular. As cryptocurrency adoption multiplied over the last decade, the growth in demand vastly outweighed the effects of inflation so inflation wasn’t an issue and the price rose.

However, the inflation in Hex does not stem from computer work in the form of electricity like in the case of Bitcoin or Ethereum. Inflation in the Hex system is completely arbitrary, unnecessary and solely exists to create funds out of thin air to pay people. Likewise, if Schueler and the Hexicans can rope enough new investors into the scheme to drive up the token price or keep it level, investors won’t notice the effects of inflation either. Now you can understand the vast marketing and shilling efforts.

Everything else being equal, the expected return to total Hex capital from generating inflation is 0%. You have more tokens, but each token is worth a little less.

It’s like cutting up a sandwich into smaller pieces – you don’t have a bigger sandwich.

When an equity security conducts a 2-for-1 stock split, there exists twice as many shares, but the total capital stays the same because the share price is halved.

Hex is like buying a foreign country’s currency that only printed extra bills to pay “interest.” At some point you have to convert it back to your own currency to spend it. When you make that conversion, supply and demand will reduce the value of what you thought you earned.

There’s nothing magical about the chosen inflation rate of 3.69%; it could have been 1%, 2%, 5%, 10% or anything in between to create a different perceived rate of interest with a differing level of token dilution. When you grasp that concept, you will realize how pointless Hex really is.

Richard Schueler could have written the smart contract to say that every year a zero will be added to every locked account balance. Would anyone actually believe that they were 10x richer? Of course not, so why does the more subtle way that Hex uses this principle fool so many people?

Fool’s gold does not turn into real gold.

What Makes Hex Effectively a Ponzi Scheme

From the SEC, the technical definition of a Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. 

When Ponzi schemes were defined 100 years ago, private currency ones didn’t exist, so Hex doesn’t quite meet the exact legal definition since the cashflow of new investors doesn’t directly cross the table to another investor’s pocket.

That’s where Richard Heart and his followers stop the discussion: “See, not technically a Ponzi, therefore not a scam!”

You aren’t investing with dollars, euros or even another crypto and being paid back the same currency as you would in a classic Ponzi scheme here. There’s an additional step in the process.

Hex controls its own seigniorage and it is written into the contract to just mint more tokens over time and then those tokens are paid out to existing investors as interest. Therefore, the Ponzi link where the cash transfer from new investor to existing investor comes from buying those freshly minted tokens off their hands, the “purported returns.”

Hex can mint new tokens until the end of time, but herein lies the gist of the problem: by constantly increasing supply, there will always be negative price pressure on the value of what those tokens are worth. Yes, the laws of economics and debasing a currency still apply to the world of crypto.

Otherwise, imagine if immense wealth could just be created by printing more tokens and distributing them; everyone would be millionaires…. Venezuela style.

The amount of new capital that needs to be brought in to absorb these new tokens is quite sizeable as we will see in a later section.

A technical Ponzi scheme eventually collapses because the earnings aren’t really being generated and the scheme always needs new investors flowing in to pay off the older investors.

In contrast to Hex, since the purported returns are paid with additional inflationary tokens, these additional tokens need to be absorbed by new investors, otherwise the token price collapses.

In either case, the collapse can be delayed for years when investors wait to collect their purported earnings and ‘reinvest’ them (sound familiar?). Bernie Madoff’s scam lasted for decades because most people just continued to roll their investment again and again.

This is what what makes Hex analogous to a Ponzi scheme, only that there is one additional step where both new and existing investors are transacting indirectly with each other through a token that is subject to supply and demand.

The average lockup time is about two years, so there is a long delay before the impact of the freshly minted tokens takes effect on the Hex supply.

The Hex Token Distribution

Inflated Address Count

In an effort to pretend that there are more investors than there really are, someone, guess who, sent HEX to 173k addresses in large batches, mostly small amounts of 100 and 101 HEX and the addresses have no further activity.

These are throw-away amounts since the Ethereum gas would cost more than the value given to actually sell it. Schueler loves to brag about how many unique wallet addresses have Hex, so here’s your reason why. The owners of the addresses probably don’t even know Hex is in their address since you have to manually import tokens into your wallet to actually see them.


Heart loves to talk about how Bitcoin and other blockchains are so centralized.

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Pot Calling the Kettle Black. Source

The irony is apparently lost on him, but in reality he is just preying on people’s ignorance to be unaware that he created a huge number of wallets to hold his own Hex stash to give the illusion of decentralization.

Remember all those first year features we discussed above? They were important to explain how he has so much Hex in this next section:

How Much Hex Does Richard Heart Own or Control?

Etherscan provides a tool to look at the top 500 token holders. Almost all of them were created in blocks on the same day, within the same hour. Try to find a single account in the top 150 that wasn’t funded by the origin account. Furthermore, there is a whole block of accounts that all have the same exact amount in them.

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Yup, you guessed it, all funded by the origin account.

In fact, I couldn’t find a single Ether account in the list of 500, from randomly clicking, that had any activity beyond just funding Hex. Geee, suspicious.

Then check out this Ethereum address, with funds originating from a money laundering mixer all paying the gas fee on 200 accounts each worth 350-400 million dollars in Hex tokens. See for yourself and do the math.

These simple observations show that Richard controls the majority of the entire supply of Hex. His laziness to use a single account to fund the gas fees on 200 other massive accounts is much appreciated because it made the analysis much easier to collate.

So how much Hex does he control in total? I originally speculated from the above points that an automated account analysis program would show his ownership of up to 80%. Well as it would turn out, someone has actually managed to collate the addresses funded from the origin address and found Heart controls 88% of all Hex! 88%, just wow!

If Richard himself didn’t want to pay a 20% founder’s tax on a coin, why does he deem it acceptable for you to pay an 88% founder’s tax? He didn’t even attempt to make the product remotely fair and he’s playing anyone who buys into it for fools.

I’ll note that he can’t get that value out of the system unless lots of future suckers buy in to prop up the price while he is unloading, which is why the marketing efforts are more broad than you typically see for cryptocurrency.

But why obfuscate his holdings? Would there be fewer Hex token buyers if everyone knew he controlled so much and the main point of the token was to enrich himself? I think you know the answer.

Why Is The Hex Interest Rate 40%?

The 40% number comes from the requirement that only people who lock up their funds get paid the inflation and currently only about 10% of Hex token buyers have locked up their funds.

As we showed before Schueler owns about 88% of the token pool and he has not locked them up in order to keep the advertised rate high. That’s the only purpose these tokens serve and since he didn’t pay for them, losing 3.69% of their value every year to inflation is of no consequence if it attracts more buyers clamoring for the 40% APY and therefore drives up the price far higher than his inflation losses.

This is a two way street of course. Since 90% is freely available, your biggest risk is that large quantities of Hex will be dumped and the price of the token will drop to a level far lower than your cost basis and inflation earnings.

Thought Experiment, an Improved Hex Without a Rug-Pull Risk

Even the often advertised “only 3.69% inflation” is a deceptive shell game to give an appearance that the arbitrarily chosen contract inflation rate isn’t terribly high in the grand scheme of things.

Would as many people buy into the token if the advertised rate of inflation were 40%? I think not.

Let’s start with a thought experiment. Say that Schueler sent all his unlocked Hex holdings, the ones keeping the advertised rate high, to a burn address and then he no longer had access to them or the ability to sell them into the market. This would reduce the rug-pull red flag risk significantly (he still primarily controls the DEX liquidity, so not 100% in the clear, but less risk overall).

The ‘interest rate’ would still be 40%, and all newly generated tokens would still be still funneled to the retail lock-up class. For all intents and purposes, Hex would work exactly the same as it does today without Schueler’s ability to rug-pull. Basically it would be a slightly improved version of Hex.

But in that scenario you have to ask yourself, what is the purpose of all these superfluous tokens laying around in a burn address for? The contract could just be re-written to skip generating them in the first place for the same effect. But then of course for the contract to be able to pay the 40% rate, the inflation rate would also have to be 40% and the nature of the scam would be very obvious to all.

Do we understand the deception now?

The key point is that all these extra tokens that Schueler controls were minted and not locked just to give the appearance that total inflation in the Hex system is low, while at the same time maintaining a high rate of interest. The 36% rate difference doesn’t come from magic. He could have doubled his tokens and we could pretend that there’d then be an 80% APY to the retail class while maintaining a 3.69% contract rate.

Therefore, the effective inflation rate to the circulating supply is 40% since all newly minted tokens are being funneled to the retail class. Of course, some people have chosen multi-year lockup periods and those tokens won’t flood the market for some time, but eventually they will come. Hex is only two years old and the maximum lockup period is comically 15 years, older than cryptocurrency itself.

But here’s the rub, this improved version of Hex doesn’t even exist! Schueler still controls the 88% share and there is only downside risk to his massive ownership. He can either dump these tokens onto the market, or lock them up and reduce the “interest rate” for everyone else. If he locked up his whole share, the interest rate would drop to the same 3.69% rate of contract inflation (ignoring 1-2% of retail Hex shares in transition or not being locked for other reasons).

You have to trust that Schueler won’t do either of these things, which violates a central principle of decentralized finance: trust.

Problems With The Size of Hex

Hexicans love to brag about how Hex is a ‘top 3 coin’ in terms of market capitalization, and at the time of this writing was worth $159 billion.

  1. Hexican’s preferred coin ranking list is basically anything other than the gold standard, CoinMarketCap, because it lists Hex at #201 instead of #3.
    • Not only does CoinMarketCap have an evaluation process that attempts to weed out low quality projects, one of their main requirements to list in the top 200 is that a token must be listed on a centralized exchange with material volume, such as Coinbase or Binance.
    • It’s curious why these retail exchanges will list dozens or hundreds of other tokens, but specifically exclude Hex when it is so large. We can only speculate as to why, but exposing their customers to all the risks I have brought up in this article could be a risk to their regulatory obligations if it ends badly for their customers.
  2. It’s so large, but Schueler and Hexicans always invoke the low price fallacy: “It’s pre-viral because it is only $0.26.” Bank of America could split their shares 100-to-1 and have a stock market price of $0.47 but that wouldn’t make it any less of a $250 billion company. Price has no bearing on future opportunity or cheapness without considering how much supply exists along with it.
  3. If Hex were to 4x in size at this point, it would exceed the valuation of the platform it’s built on, Ethereum (which reminds me of the Palm Pilot craziness of the Tech Bubble).
  4. Having a large market capitalization combined with permanent inflation is an issue. Think about how $159 billion*3.69% is about $5.8 billion in new tokens a year that must be absorbed from new buyers, and that is only if the price stays where it is currently at. Presumably many will ‘re-stake’ again and again keeping the supply off the market for a while, but that is only delaying and stacking up the eventual unwind.
  5. Trading volume for a token of this size is quite low. Price discovery comes from volume and basically any other coin in the top 100 has multiples more. You can compare apples-to-apples by taking the volume and dividing by the marketcap. A typically this number is between 0.02-0.06 or more. As of this writing, Hex’s volume ratio is less than 0.00035 which means it has 1/57th of the trading volume of its peers.
    • This low volume is NOT a reflection of Scheuler’s outsized ownership interest or the lock-in product feature keeping supply off the market because CoinMarketCap’s volume calculation only considers the circulating supply of $43 billion.
    • If you consider the entire supply, it’s 0.00009522, or about 1/210th its peers.
    • This volume disparity is somewhat of a result of not being listed on centralized retail exchanges, but it is uncertain exactly how much.
    • The point being that low volume anythings are easier to manipulate.
Richard Heart's Hex Token is a Brilliant Scam 24

Schueler tries to lead you away from these inconvenient points in his YouTube videos and he constantly claims that market cap and volume do not matter, because “you can’t make money from the market cap or volume.” But of course it matters. Market cap is essentially the “account balance” of all token holders in the system and the volume is the capacity to unload those balances. And as mentioned, the market cap combined with the inflation rate determines how much capital must be brought in just to keep the token price level over time.


Watch a few Youtube videos of Richard Heart getting interviewed by someone critical of Hex and see his replies. When he takes a break from all the name calling and insults, you’ll find that he is very adept at manipulating semantics and introducing red herrings into his arguments.

If you watch enough of his material you’ll see that the same script is uttered ad nauseum and then regurgitated by the Hexican underlings.

False Analogy to Bitcoin

I am NOT a ‘Bitcoin maximalist’ as some have claimed in an attempt to undermine the points I make in this article, and I only bring up Bitcoin throughout this article because Schueler is constantly comparing it to Hex and inventing reasons why Hex is supposedly much superior. It’s his favorite rhetorical device likely due to Bitcoin’s name recognition and its established background.

He claims that Hex offers the best opportunity to buy now because it’s ‘just like Bitcoin in the beginning.’ In its beginning, Bitcoin had:

  1. Low liquidity.
  2. Large founder’s share.
  3. In hindsight, those who held the longest had the best return.

And Hex has low liquidity, a large founder’s share and had a quick initial gain! See, same same! Buy, buy, buy!

But cryptocurrency was in its infancy 11 years ago: few people had heard of Bitcoin, it was the only digital currency available, you could only trade it peer-to-peer, and you could mine it on your own home computer. It was a big gamble that cryptocurrency would even have any value at all many years into the future because digital currencies had been tried before and failed.

When you only had a handful of people experimenting with a new technology that had a limited practical value at the time, of course, there is going to be low liquidity and a large founder’s share. However, Bitcoin wasn’t engineered to have those features like Hex was.

There are now over 10,000 cryptos covering $2 trillion in value, dozens of retail crypto exchanges, ETF like trusts that buy and hold Bitcoin, and futures contracts on it: cryptocurrency has not been in its infancy for 5+ years now.

Additionally, Bitcoin exists by itself. Hex depends on another cryptocurrency, Ethereum, because it isn’t even an independent coin; it’s a token.

To make the jump that Hex is like Bitcoin because they both, well, use blockchain, is completely nonsensical, but it has the contrast about the size of the Grand Canyon.

What is Hex’s Purpose?

Ask yourself, what innovation does Hex add to the table aside from being a self enrichment scam?

Bitcoin’s purpose wasn’t to furnish its users with investment returns, which is Hex’s only purpose.

Bitcoin was invented to facilitate digital payments and solved a double spending problem for digital money. Bitcoin was the genesis of cryptocurrency and it didn’t require sending the founder money to participate in it. Bitcoin is also disinflationary and has a fixed terminal supply.

Hex is none of that and anyone can clone it with a few mouse clicks. See Rex, for instance, on the Binance Smart Chain (lower gas fees).

What does Hex do? Spawns more Hex. Anyone can write a contract to do that.

Schueler saw that other scammers were getting rich creating scam-coins and just wanted in on the action. He only put a little more thought into the storyline of why you should buy.

Hex.com Coin/Token Review Summary

The biggest problem with Hex is that ‘interest’ is being paid, but the token doesn’t generate revenue, so the only place money can come from is other investors. That’s a Ponzi scheme no matter how much spin you put on it, and boy is there a lot of spin laid on thick.

Over time, Hex will need to bring in an average of $5-$6 billion in capital each year to keep the token price level (at today’s price). That’s a tall order. Surely plenty of existing investors will defer selling their interest tokens and will lock them up for additional time making the new capital requirements a fraction lower, but the additional supply will continue to stack up until eventually it gets sold onto the market.

Furthermore, Hex is the largest smart contract token because the founder baked in a lot of perks and loopholes for himself leading to an obscene 88% ownership of all Hex tokens today. Try to go into the mindset of someone who creates an ‘investment’ product, but didn’t actually contribute his own capital to obtain that level of ownership. Who’s he really trying to make rich, you or himself?

While Richard Heart likely won’t ‘rug pull’ because a smart parasite doesn’t kill its host, he will dump his massive holdings onto the masses over time in order to cash out if he is successful in gaining wider adoption through the extensive marketing efforts.

Additionally, Richard Heart’s large social media following led to a lot people who got in on the ground floor and also stand to make a lot of money from future buyers and therefore contribute to the shilling and advertising effort through social media.

When a token has gained 2,000x+ in two years as a result of marketing and manipulation, there are a lot of people who have contributed minimal amounts of their own capital, but are showing a life-changing account balance and are counting off the days until their lock up period ends and they can sell to someone else and realize that massive gain. These are people who are not going to tell you to hold off on buying it. It’s best not to ask the ones who benefit from your ignorance whether you should buy.

BitIRAInvest in a portfolio of cryptocurrencies and legally avoid taxes on your gains with an insured, cold storage IRA

As such, the only rebuttal from Hex shillers about why Hex isn’t a scam seems to be because their account balance has gone up since they bought in. People also thought that they were getting rich with Bitconnect (which peaked at #7 and still trades) and Bernie Madoff, but only those that sold before the bottom fell out actually made any real money. The same scenario will pan out with a majority of Hex investors.

Yes, you too can make money in scams if you buy earlier than the majority and sell before they do, but is Hex worth investing in for that point alone? Only if you like to perpetuate scams and are sure you aren’t the last sucker buying the top. The trouble with these kinds of schemes is that usually by the time you find out about them, you are one of the later investors buying close to the end of the line while the earlier investors are selling their bags to you.

It’s right in the name: You are being Punk’d.

Richard Heart's Hex Token is a Brilliant Scam 25

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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.

180 thoughts on “Richard Heart’s Hex Token is a Brilliant Scam

  1. Truth of the matter is, this author nor anyone else have any idea as to the outcome of success of any project. I for the life of me cannot fathom why anyone would want a Dog coin or a governance token, but would I write and article or waste my time convincing people not to buy one? NO!!! It would be futile. The only thing I would have to gain by doing so is that perhaps their funds would flow into the liquidity of the projects that I hold interest in. I’ve seen many articles like this, most of which had the facts as they pertain to Hex completely wrong. I will give it to this author he has covered most if not all of the Hex haters talking points, and by ever so slightly skewing the actual facts or mildly imparting his own assumptions, his article almost seems like one of an objective critic calling out Hex for being a scam that is meant to hoodwink its investors into loosing all their monies. I would not be surprised if this was PAID FOR FUD, sponsored by those fearful that Bitcoin might loose market share to a product that is much superior. It’s actually the sheer number of SHILLED hate articles that strengthen my resolve in the Hex project. I have to ask myself.” why do people care so much about me getting scammed by Hex”. Why not just write an article about a project that is so good that it would make me want to invest in that project and forget all about Hex. Perhaps because one doesn’t exist? If I wanted to protect Bitcoin it would be easier for me to write articles defacing projects that challenged Bitcoins dominance, then to write articles as to why Bitcoin is still better then said project. Its easier to put out an ember then a flame. The naive and the smart people will prosper and the midwits will miss out. DYR.

    1. Let’s break this down here. So a Bitcoin holder, whose presumably already made multiples of his money from owning Bitcoin, is going to pick another cryptocurrency that isn’t even the slightest of threats to Bitcoin’s dominance, and pays a random blogger on the internet who has only a small platform to write a 5,000 word negative article about it? And then said author doesn’t even promote Bitcoin in the article, and has previously written about problems with it [link]? Why not pay that author to bash the #2 coin, Ethereum? Said author is not even a “crypto influencer,” and doesn’t have a Youtube or Twitter presence. Hmmm, I dunno but your argument seems pretttttttty flimsy, wouldn’t you agree? By your logic it is impossible for anyone to have negative opinions on Hex and it’s a cheap way to discount Hex’s flaws in your own mind.
      I know you Hexicans have a remarkable talent of looking at every single negative as a positive somehow, but you are free to comment where you feel the facts are “skewed.”
      It’s also easier to see where the motivation of Hex shillers is: their future gains depend on sucking in additional buyers. They need nearly $6 billion in new capital coming into the scheme every year just to keep the Hex price level. The ratio of Hex shilling to criticizing on major platforms like Youtube seems to be 100 to 1. I get more concerned about situations like that because the negatives are drowned out.
      This article was written for the investors who don’t want to be shilled to and seek out criticisms in things they put money in. Smart investors want to know where things can go wrong. Three months ago I had never heard of Hex or Richard Heart, and I started researching it as a prospective investment. It’s just that the more I dug, the more obvious of a scam it became and why I wrote this article.
      I agree it wouldn’t make sense to write an article on a dog coin. Everyone knows that meme coins are just that. That’s why I chose to write an article on a product purporting itself to be a “certificate of deposit” investment. If you look at other topics on this blog, I criticize a lot of alternative investments and point out their flaws. That’s the theme and why Hex was ripe for it, as a clever scheme.

      1. “Bitcoin might lose market share to a product that is much superior product”. Wow superior hex does 25 million in daily volume compare to billions for Bitcoin. Hexicans are crying now because Nomics.com drop their ranking from 3rd in market cap to 18th which they don’t belong on either ranking because their market cap are manipulated by low liquidity and supply by Richard. Even the top 100 coins does more volume than hex so you can see there is something wrong with hex.

  2. The entire crypto ecosystem, with of course a few exceptions, is essentially a closed universe of adult gamblers trading and “investing” in things that have no real globally scaled utility, currently. It only works bc it’s a closed system playing with participants in its own world of made up rules and assets. that’s where all the value is created-in the fact that it is in and of itself, a closed universe, much like real life with the Fed. That is the only reason it works.

    In real life everyone is subject to inflation by the FED through explicit raising of interest rates or other pseudo things such as treasury purchases, etc–all of which we have no control of but are subject to. The decision not to hold cash but rather to invest is an exercise in: 1. beating inflation, or at a minimum maintaining value w inflation and/or 2. generating alpha. The reason is largely both of these, bc even investors in low vol products such as gold (to temper negative effects of inflation) are also happy to generate a profit. Those who choose to engage in investment over holding cash are rewarded with asset appreciation for their risk, and capital preservation/protection for their inflationary deterrence at the expense of everyone else in the ecosystem who is holding cash and not taking said risk, but rather choosing to maintain full exposure to cash devaluation through economic inflation.

  3. The beautiful thing is that the crypto world is also a closed system like real life. And Hex is also it’s own closed system as well. It’s open in the sense that anyone can participate, but it’s closed in that it plays according to it’s own rules–it’s own “arbitrary” inflation rate, or it’s own number of total coins, etc, Go trade something else with it’s own made up rules and arbitrary inflation or deflation or whatever. It’s all made up, there is no Property, Plant, or Equipment. There is no real market cap, there is no real anything in crypto. There is no utility. Maybe it’s a bubble until the world catches up, maybe not. Who cares. It’s like poker, there is utility only to those engaged in that system, according to the stated rules, at that time. Which is why poker is not the economy. It, in and of itself, is nothing. In the instance of Hex, it is also a closed system in and of itself with participants choosing to hold unstaked Hex, like people choosing to hold cash in the real world. Unstaked Hex in the Hex world is a negative value proposition as is holding cash in the real world–both subjected to inflation which is paid to the invested, but of course not explicitly. In every closed system the returns aka rewards are always paired against the alternative–in this instance vs cash aka unstaked Hex. As long as people decide to engage in the Hex world, then those are the rules. Exactly similar in structure to normal inflation games played in “real” life on Earth. And it will continue to be such as long as people want to engage in that system, as it is with all things on Earth. There is no more of a scam than in traditional finance, in which things are the exact same–cash is the worst investment. Staked cash and it’s returns, ie investments, over any specified time period, in any closed system where inflation and a single alternative to inflation exist, is always the winner. Of course, not always, but that is the risk. Hold cash then lol

  4. Good post with lots of research I must say, but I have to disagree.

    1. Existing fiat is printed out of thin air and inflation right now is huge! Fiat in itself is a scam. Does that mean it’s ok for HEX to also be a scam? Maybe not, but whatever you want to call it, fiat is not an angel either. Richard Werner (check him out) has written papers on this for 20 years and it’s been admitted by the Bank of England. Loans are not lent out, but printed into thin air! Then when a loan is paid back the money is removed from circulation. HEX just does it all directly and out in the open, the fiat system hides it all and makes you all think its great! Existing dollars are being inflated hugely.

    2. Many assets don’t have utility, gold is the least useful metal yet the most valuable, paintings and antiques sitting in a house have no use yet cam be valuable. Bitcoin so far has had little use as peer to peer cash yet is the most valuable! Why? Supply and Demand, that’s all it is, HEX is similar. Why can’t HEX be a new peer to peer cash in the future? It’s possible. It’s just so early right now to tell, just like it was with Bitcoin.

    3. Market cap is a vanity metric. You can create a trillion coins, buy one for a dollar and you have trillion dollar market cap. HEX market cap isn’t really an issue, it has some meaning but market cap isn’t everything. It’s price action. People talk about volume and liquidity, but that’s only an issue if you want to cash out! If you believe in crypto rather than fiat you don’t need to cash out! That’s what everyone is missing. You don’t need to sell your BTC, ETH, HEX at all, because these are the new mediums of exchange! If all you think about is liquidity because you want to cash out then you shouldn’t be in crypto at all.

    1. For 1. Yes, the government money printing is out of control right now. Inflation was tame for 10 years but they really got excessive with the 33% of all dollars minted in the last year. It’s pure insanity.
      Yes I have seen the Richard Werner comments [link] and have read the Bank of England paper [link, see page 18, p4]. It is clear that RH or your average Hexican didn’t actually read the paper and just took out some quotes for their own interests about why Hex is ‘just like the banks.’ The BOE paper and Werner’s comments describes an accounting mechanism inside a fractional reserve banking system: Banks only hold a portion of the money in reserves, this isn’t news to anyone who has taken an introductory class on macroeconomics. Warner’s comments say the “banks don’t take deposits,” which they obviously do, and “banks don’t lend money,” which again they obviously do. If you really read through the transcript [link] you will see it’s just a semantical game of words like “promissory notes” and “IOUs” that doesn’t actually change the reality that banks make loans and take deposits.
      Banks wouldn’t bother to take deposits if they didn’t need to because depositors are their cheapest source of funding. They pay 0.01% to depositors, but have to pay 0.25% to the Fed. In a fractional reserve system banks only have to hold a minimal amount of money to meet customer demands and then loan out the rest, but its been like this for a couple hundred years. They act as a middleman between those who need loans and those who need a place to store their cash. When they need more funding they borrow from the Fed at slightly higher rates. Loans aren’t inflationary in the same way that printing currency is because the loans are eventually paid back, or collateral is seized. Fiat, Hex, and many other cryptos constantly inflate which reduces their long term value relative to one another.
      I don’t think the choice is only between Hex and fiat or Hex and Bitcoin though there is a lot to choose from that don’t have the same risks as Hex. In fact, I don’t think that cryptocurrency is much of an inflation hedge at all [link]

      1. Sure, but not all loans are secured loans, many are uncollatoralised/unsecured loans. The debt to GDP ratio is getting higher for many big nations and doesn’t look like stopping.
        And sure HEX is risky, but no risk no reward. Savings accounts pay zero interest and stocks are being pumped by inflation so crypto is the best place right now albeit as long as you mitigate risk.
        HEX is anti trading, what I like about it (and other cryptos, but especially this) is nothing is opaque. With the banks we really don’t know 100% what they’re doing, so much mixed info. I love the transparency that HEX gives, you know what you’re getting in to, most other things you really don’t know!

        1. Not all loans are secured loans, but someone has to pay it back, either the client does or the bank eats the charge. The government does not eat the charge for loans originated by banks, therefore, it doesn’t have the same long term inflationary effect that printing money does. (For the national debt, I’m assuming a hyperinflationary Venezuela situation where the government starts printing money to pay down its national debt, permanently, is not going to happen in the US, but basically every crypto will look good in that situation).

          Bank 10Ks and 10Qs tell you a lot of information about their business. BDC filings also tell you who they’ve loaned money to. The knowledge that Hex’s ‘business model ‘ is to only print tokens and distribute them doesn’t make me suddenly accept it as valid, just because of transparency.

          ICP is also anti-trading with their 8 year dissolve delay option. ICP is creating an alternative to amazon/google/microsoft cloud services, which is their most profitable business lines. It may work out, or it may not, but at least there is a business behind the scenes that generates a portion of the income.

    2. 2. That 88% founder’s tax will certainly hamper adoption and there are plenty of choices vying for the magic internet money designation. Stellar, Ripple, Nano are all very established and don’t require $100 Ethereum gas to transfer value. Sure the Pulsechain is coming which will lower the gas fees, but that’s always only a few months away until launch and still requires adoption.

      3. Market cap is important because it represents the ledger of how much value is in everyone’s accounts. It also relates to how much value in new tokens is being minted each year, so yes, its extremely important. Heart just doesn’t want to draw attention to the fact that he owns $139 billion of the supply so he always refers to it as a vanity metric. You can create a trillion coins, but you can’t invent a market for it and sustain that price level, which is why volume has a relationship and is important for market cap.
      “but that’s only an issue if you want to cash out! If you believe in crypto rather than fiat you don’t need to cash out” Most people eventually want to spend their earnings and not just have an imaginary account balance grow until they die. Even if you spend Bitcoin at a merchant, they use a service like BitPay that immediately sells it onto the market to collect their fiat. The world you are envisioning is a world without fiat. It could happen, but governments around the world will do what they can to hamper that scenario from materializing.

      1. 2. Perhaps yes but whether people like it or not from an ethical standpoint I think RH will do everything he can to keep HEX up, he is that smart, such is the power that he can have with that much money. The tax bit I’m not sure about, I would thought only an issue if he sells, maybe I’m missing something here! The HEX in the OA just sits there.

        3. Agree market cap is important but I think we get too hung up on these metrics and volume too. Of course there is also a balance, but what really matters is price action so long as the slippage isn’t too high. Actually HEX market cap on nomics is 35 billion as they removed the amount in the OA because it’s not circulating. Either way I’m not too hung up on it, HEX doesn’t care, people care but HEX doesn’t!

        And yes absolutely I envision a world step by step where fiat is phased out. We’re in a transition now. We went from Yap stones to agri beads to gold/silver to fiat and I think crypto will be next. You have to think long term, not short term. That’s where HEX and BTC (the only 2 for me as they have high demand and low supply..HEX scarcity is through T shares) come in. They are a long term hold, not for pump and dump trading….pump and dump trading is robbing Peter to pay Paul much like you said with HEX, but HEX is the lesser evil in my opinion. Just hold them and in the end I’m confident. I really think HEX will shock the whole crypto community just like BTC. People can question ethics….to me the whole system isn’t ethical and crumbled after 1971 gold standard ending. I now accept this and take the lesser Evil of all Evils :-). It’s the best of the worst in my opinion.

  5. 4. HEX doesn’t inflate at 3.69% a year as such, it’s delayed inflation because the HEX only gets paid when you end your stake so liquid holders are not getting diluted in the simple way that’s explained. The price of anything like shares needs more people to buy in to get the price up, that’s nothing new. But HEX technically doesn’t….the price can remain flat but you still get interest when staked and penalties paid for stakes ending early.

    5. The OA holds up the price and stops a 51% attack. Although possible it could dump the HEX in theory but there is tons of ETH at the OA, would make much more sense to dump that as low slippage and easier to cash out. No founder generally wants to nuke their own creation.

    6. I admit there is risk, but no risk no reward. Many criticisms were directed at Bitcoin early, but look what happened! Bitcoin inflates too at 6.25 every 10 minutes.

    7. The honest truth is the whole lot is a scam….Bitcoin, fiat, the whole economy. HEX just gets singled out because it’s doing it directly such as inflation at 3.69%,etc. So it’s easy to see what’s happening. The rest of the economy is all opaque so harder to scrutinise. HEX is just a better scam than everything else, but people don’t want to think the whole economy is scam so they shut their ears to it.

    1. for 4. Whether the inflation occurs continuously throughout the year or at the end of the ‘stake’ doesn’t really make a material difference to the long term result because the new tokens are still being minted and are stacking up to the eventual sale. Yes, it does hold off on new supply for a while, but that’s a function of how long people’s stakes are and its just delaying the inevitable.
      For 5. 51% attacks are hashing power attacks that allow the attacker to change the blockchain ledger. This is not a concern for Hex since it is a token on top of Ethereum (which is subject to a 51% attack, but super low risk given its massive size). There is absolutely no benefit to anyone else in the Hex system that one person owns 88% of the entire supply. It’s entirely risk that that person will dump chunks of it from time to time which will impede any price ascent and gives him ultimate control on how much appreciation other users get, which is diametrically against the principles of decentralization. I don’t think he will rug pull because that would be only a one time gain and the jig would be up, but he will certainly unload lots of it when the token is on upswings. He could send 90% of his holdings to a burn address and still have millions of dollars of “founder’s tax” and that would certainly alleviate one of the biggest red flags with this project. Instead he has squirrels tens of millions into various wallet addresses for obfuscation.
      For 6. No risk no reward, sure. But why not choose honest projects make economic sense? It’s not a choice between Bitcoin and Hex, but Bitcoin, Ethereum, Solana, Cardano, AVAX, and thousands of other projects.
      Bitcoin is disinflationary and after enough time the inflation won’t exist anymore. That’s not the case with Hex that has to mint currency to pay it to ‘stakers.’
      For 7. Yup, the Fed has really screwed up our economy with the endless quantitative easing.

      1. 6. To me HEX is very honest. Actually its almost too honest and the truth hurts. You can basically see everything that’s happening on the blockchain (except for a few tornado cash things going on with recycling ETH,etc but not 100% proven anyway). HEX knows that people only really care about making money, it’s brutal honesty that I like about it and it’s been specifically designed to do that. It doesn’t beat around the bush! I think ETH, SOL will all do well but because they don’t have the scarcity built into them with a capped supply eventually it won’t hold. Still a good return but not phenomenal like BTC and HEX….so far. When I talk about scarcity in HEX I mean from the T share side, not the HEX token side itself. HEX and BTC are the only 2 cryptos that monetize time and you can’t get time back, that’s so powerful. The scarcity increases with time. That’s why forks of BTC and HEX haven’t worked because BTC is becoming more secure and scarce with time and HEX is becoming more scarce due to T shares. REX and Axion are 1 to 2 years behind that and now can’t catch up because HEX has already built in scarcity in T shares in combination with high demand. Axion is struggling with its game theory (although I still quite like Axion myself). Axion and REX don’t have the demand that HEX has and therefore won’t do as well because its supply AND demand that you need together. So no, in my opinion you can’t just now copy HEX….it’s too late.

        BTW, I love this discussion and learning alot from your views…so thank you! It would be a boring world of everyone always agreed on everything ha!

  6. Yes I do agree it’s a brilliant scam, but that’s because the whole system (fiat included) is a scam. It’s just we don’t see it easily because with fiat it’s all opaque. HEX is confronting because it makes it all clear, it’s not really hiding anything.
    The HEX inflation is a max of 3.69%, typically much lower because stakers don’t get paid until they end their stake so the inflation is delayed. Therefore liquid holders are not get diluted at 3.69% per year, that’s just the maximum.
    Michael Saylor mentioned many times the reason he bought BTC is because inflation isn’t typically 3% as we are old told but more like 20% if you include cost of capital. That’s why he bought BTC to hedge that as a store of wealth. HEX is at most 3.69%, much better than 20% inflation in fiat! Again in fiat it’s too difficult to see it all, you have to do intense research as Saylor has done. With HEX its so obvious so we scrutinise it easily and think it’s special. It actually isn’t, it’s just a better scam than everything else. In that sense I think HEX is a better investment than stocks and all sorts.
    With stocks they can’t be used as a medium of exchange but HEX can be like BTC,etc. I think we confuse stocks because you need liquidity to cash out. With crypto you don’t need to cash out because it’s meant to be the new money essentially so no need to worry about liquidity and volume, just hold the crypto 🙂

  7. 4. Sure but my point here is the inflation is a MAX of 3.69% which isn’t that much. I’m relying a little on the smart Michael Saylor here, but his reason for getting BTC was because inflation in much nearer 20% than the 3% we are told. So HEX isn’t that inflationary and when you account for the deflation in T shares that’s where the real smart part is.

    5. Well in my understanding yes a 51% attack is from a PoW perspective but essentially you can do that with PoS if you have 51% of all the supply as they get to mine the next block, highest staker (although PoS isn’t that simple because after that they go to the back of the queue so they don’t get continuous power to keep mining new blocks). But yes in HEX terms I get your point. What I mean is control of the supply because you can dump it hard. Axion, which is a fork of HEX has this issue because it doesn’t have an OA and it has dumped hard many times. The OA prevents a larger whale from dumping, that’s what I meant.

  8. Thanks for aggregating all of the essential info on Hex into one well-written post. I think the next horizon to explore for us Hex Truthers is what happened/will happen to all the funds from the OA that were disbursed into the hundreds of shell accounts (the ones funded with ETH for gas fees from the Tornado.cash mixer you mentioned).

    Most of these shell accounts seem to have short-term staked their enormous amounts of Hex prior to the “Big Pay Day”, turning amounts of around 900 million to ~1.3 billion a piece. Then their Hex balances sat idle for a long time but were ultimately sacrificed into Pulsechain. A lot of these addresses already have large balances of PLS tokens sitting in them, though it’s not clear whether this is real PLS or just some kind of testnet prototype of the real thing that’s coming.

    In any case it seems pretty apparent that Scheuler’s strategy is to further obscure his holdings by creating a preloaded army of PLS whale sockpuppets that he can use to freely dump on the rubes post-launch, having it all go undetected. He’s built the entire scam on the idea of the OA never selling and being a necessary feature to prop up the economy. But if the OA instead becomes converted to hundreds of mini OA’s and they don’t “sell” the Hex but rather “sacrifice” it into a new asset class on a different blockchain, it will be easier to liquidate the spoils and have it appear that these sales are from legitimate PLS holders rather than Richard himself dumping the original OA funds.

    1. An interesting theory ha! When you say sacrifice the HEX rather than sell the HEX what do you mean exactly? You mean swapping the HEX to PLS? But if that happens that’s basically selling it still, there is now less HEX in the OA or mini OAs. So we would know wouldn’t we? I’m probably missing something here cheers!

      1. It was a transfer from individual holders to the Sens organization, a donation if you will. I think they got some promise of a PLS Hex bonus for doing it.

        1. Ah! He is talking about the actual Pulse Sacrifice phase. I’m well aware of that, I thought he was referring to another Sacrifice.
          Anything is possible but to pull off a scam where something is so public like blockchain is difficult. Different with the whole ICO phase, but at this point in the peice with HEX it will be hard given how much scrutiny it is under. It’s performed so well people are looking at every nook and cranny and still not able to come up with any substantial solid proof.
          But I’m open to the possibility that RH is so smart he could also have a bunch of other wallets he is using to buy more HEX with the ETH to keep up the price.
          Whichever way you look at it, I still think the combination of a smart, rich owner with fantastic game theory is the recipe to huge success here, albeit if the owner isn’t doing totally ethical things. I don’t love it, but since I have little confidence in the whole economic system as a whole and many ethical issues there, Im picking the lesser evil in my opinion with mitigated risk. I have diversified and have stocks too. In crypto you can take small risk for a huge reward.

  9. I’ve done some preliminary research into this but haven’t been able to build a solid enough argument to combat the hordes of mind-rotted Hexicans, nor do I think I’m as well-equipped for this endeavor as you are. So I’m merely sharing these findings as an area for your further investigation. The Pulsechain launch should bring a lot more clarity as to what Richard’s real plan and intentions are, but it will also require more intensive digging to find answers, since the raison d’etre of the Pulse fork seems to be obfuscation of Richard’s assets to provide him an easier exit hatch.

    Also worth looking into where all the ETH paid into the Flush wallet went, though this perhaps brings more new questions than answers. Similar to what he did with his Hex, it was all split into tons of shell accounts, and then routed through layer after layer of additional shell accounts (almost comical given how easy it is to trace on ethscan and how much cash he wasted in gas fees in the process). But ultimately it all ended up in a single shady vault contract. This contract was the #37 largest holder of ETH on the entire blockchain when I checked, the bulk of it being from the original sale of Hex, and it has links to a bizarre defunct Chinese rugpull called “Crocodile King”. The founder of Chainlink’s wallet also pops up at some point along the money trail, which was an odd twist. It’s possible there are some big players adjacent to this scam behind the scenes. I’ve also noticed many of the key addresses involved hold something called a “Security Token” – some NFT-like asset, the purpose of which I can only speculate. Perhaps this signifies some kind of ownership share in the enterprise and there are others involved in the shadows working with Richard.

    There are many avenues to explore, so I can only hope you’ll keep up this important work.

    All the best,

    Yung Scheuler

  10. Such scam tokens or coins bring bad names to all the crypto world. Now NFT has also emerged as a way to make or rather scam money by selling those pieces.

  11. A couple points …….

    * (1) After an investment vehicle has gone up even just 100x, the chances are your already to late … the higher it’s goes up; the higher your risk of being to late to the party.

    * (2) Scam artists often promote their charitable giving front-and-center to the public as a “smoke screen” ….. real philanthropists generally shy away from publicity about their charitable donations

    1. You are 100% right on both points.

      RH tries to keep the pump going by making comments on videos that Hex could go to $1 million a token. You don’t have to have a degree in economics to understand the absurdity of a claim like that but his followers just eat it right up.

  12. I have stakes in hex expiring 2028.

    I liked Richard heart before hex. Whatever he says except hex and pulse is true.
    But hex is a scam.
    80% origin f**king addresses.
    90% supply founder in pulse.
    Bashing Bitcoin to pump their sh*tcoin.
    All those rolex came after hex surge.
    I have been following Richard since 2018.

  13. I do find it a problem that the person who wrote this article doesn’t even know how the banking system actually works. The banks do not take deposits and loan that out, that has not happened for many decades. The money you get from loans and things like mortgages is made out of thin air. Money creation is done through the commercial banks through loans. If you don’t understand how banks actually work then you can’t understand why they pay the interest they do and thus most of your argument makes no sense.

    1. Having worked in finance my whole career and commercial banking for a portion of it, I am glad that you, mystery internet man, are here to blow the whistle on why all those loans and deposits on the books are actually fake.
      Richard Heart can sell you on this 100 times in his Youtube videos, but it still doesn’t make it true. Read the comments above. I have already addressed the Richard Werner comments that RH uses for this justification on why Hex ‘is just like a bank.’

  14. Hold on here. Let’s repeat what you said and laser focus in on something.

    “Hex requires an increasing number of buyers to maintain the token price, which ‘interest’ is paid through, otherwise the token price collapses. This is what what makes Hex analogous to a Ponzi scheme.”

    Can I ask you a simple question?

    What happens if people stop buying Bitcoin?

    1. I always feel that one is forced to defend Bitcoin when they level criticism at Hex because of the Tu Quoque fallacy that is commonly used to validate Hex, but I’ll play along and point out some differences.
      Yes, Bitcoin does require a greater fool for you to make money on it. However, Hex requires a greater fool to not only buy your tokens, but 40%, 80%, or 120%+ more of them depending on how long you’ve held and ‘earned.’ Without a finite limit, like Bitcoin, there will always be downward pressure to overcome.

  15. I’m not asking about the HEX’s inflation and what that means for the project. Complete side issue.

    What I want to focus on is that you say Bitcoin requires a greater fool. Does that mean Bitcoin is also a ponzi scheme?

  16. That isn’t true.

    If BTC used the same nomenclature as HEX, the BTC being paid to miners would be called “interest” – but in reality the correct term for both projects is inflation – which is the expansion of the supply.

    BTC pays inflation to the miners.
    HEX pays inflation to stakers.

    All it’s doing is changing who gets the inflation and changing how inflation is created.

    The CORRECT definition of a Ponzi scheme is this: “an investment fraud that pays existing investors with funds collected from new investors.”

    For some reason you are throwing in interest into that definition, which it does not belong.

    1. Yes, both payouts are inflation, but BTC miners are actually performing a service by securing the network and are getting a piece of the pie for their work. And since they had to pay for equipment and electricity, they don’t even get to keep all of it, so it’s more akin to a tax on all BTC holders for network security. Bitcoin is disinflationary with the 4 year ‘halvings’ until the finite limit is reached and there isn’t any inflation at all.
      “an investment fraud that pays existing investors with funds collected from new investors,” and new investors are buying the tokens that the existing investors are unloading that they received as part of the fraud.

  17. “and new investors are buying the tokens that the existing investors are unloading that they received as part of the fraud.”

    People who buy BTC are buying it from people who are selling….

    This is really interesting because it’s becoming very clear that you are pointing things out in HEX that also exist in BTC, but you are labeling both of them a differently. We call this bias.

    1. I have mentioned that both systems have inflation, but think about the mechanics of both. Hex’s sole purpose for inflation is for an investment scheme. Bitcoin’s inflation is for network security. Bitcoin couldn’t exist without inflation, Hex could since it’s network security is handled by Ethereum. That is a tangible difference in design and purpose.

      People are encouraged to buy Hex for interest. Interest in the form of additional tokens, which require new investors to buy them from old investors. Just like a Ponzi, new investors are paying the old investors value. And that is before even factoring in the greater fool that both systems need for a gain on the principal.

  18. Ryan, this is all starting to fall apart even more.

    1. If Bitcoin’s inflation is for network security, then what happens when there is no more inflation?

    2. There are only two ways to get Bitcoin. Buying a mined coin, or mining yourself.
    There are only two ways to get HEX. Buying a staker’s minted coins, or staking yourself.

    In Bitcoin, you buy into inflation.
    In HEX, you buy into inflation.

    It’s the exact same thing. All it’s doing is changing WHO gets the inflation and changing HOW inflation is created. There is no other difference between the two at all.

    You can’t call one project a ponzi and not the other, especially after I very clearly laid out how identical BTC and HEX is.

    1. I feel like we are going around in circles here.

      The core principle in the design of a Ponzi scheme is the basis of earning a return from some investment activity. Bitcoin wasn’t even designed to be an investment furnishing returns, it’s supposed to be a form of money. All the talk about how both systems have inflation makes both a Ponzi, well not on that technical point alone.

      And the inflation is not the exact same because the infrastructure for Bitcoin is partially paid for from the inflation and miners have to compete with each other to develop better machines and find lower cost locations for electricity. Machines get built, electricity get used, economic activity occurs. There is a market with Bitcoin mining activity. Bitcoin is more akin to a gold mining operation, hence the terminology.

      What has Hex produced? If it’s the same, why didn’t Satoshi start with the Hex model and just have the code pay locked tokens to get people to use it? Well who would buy the mining hardware? Who would pay for the electricity? There wouldn’t even be a network. Hex’s infrastructure is outsourced to Ethereum, but it’s not free with those large gas fees to do anything, of course.

      To your first question, what happens when the last block is mined? Well the theory was that transaction fees would incentivize miners to continue after the block rewards were gone. Onion Futures has written an essay on this suggesting that the transaction fees will have to increase. Its still 30 years away, so we’ll have to see.

  19. You have no expectation of interest when you buy HEX – UNLESS YOU STAKE
    You have no expectation of interest when you buy BTC – UNLESS YOU MINE

    Why are you not able to see this?

    1. You don’t have to buy Bitcoin to mine Bitcoin and the capital that you allocate to earn with doesn’t flow to existing Bitcoin owners, it flows to hardware makers and electricity generators.

  20. When you Stake HEX, your (synthetically) purchasing a mining contract. Just like Bitcoin miners sell bitcoin to buy more mining equipment for the right to mint new coins from POW on the network. The bitcoin miners are inflating BTC and diluting BTC holders. HEX is no different. When you stake, your HEX is burned. The contract assigns you a mining contract and you have to mint your tokens back including the APY that is on Average 40%, depending on the length and the amount of HEX you chose to stake in comparison to how many stakers are in the pool. This is calculated at the time of mint and rebased every 24H depending on the system state. You determine the amount of HEX and the time length of the contract. Like a CD (but not as gross). This is ‘Proof Of Wait’ and it does it without polluting the environment. If you EES, emergency end stake sooner than your mining contract had time to finish minting the new coins, you only get the ones you minted at the time of end stake. Just like selling your mining equipment before mining the coins to pay for the mining equipment, this cuts into your earnings and possibly your initial investment for purchasing the mining hardware. So the only differences between BTC and HEX are the pollution and the inflation rate. But to me the EES is the best part of HEX. When price dumps, panic sellers will EES and hence dump their unrealized APY and or Principle in the pool of stakers. Not like a CD where the Bank takes your unrealized APY. Stakers effectivley earn more APY as the price dumps. The APY becomes more attractive so the coin is bought up and more tokens are staked to stabilize the price. Incredible game theory.

    1. Except that there is no ‘mining’ occurring with Hex at all. The inflation serves no purpose other than to fool people into thinking they have earnings after a period of time.
      “Proof of wait” is a BS term that RH invented to fool people into linking the association with other PoW, PoS, PoA, etc. systems. Nothing is being “proved,” “secured,” or “governed” at all.
      “So the only differences between BTC and HEX are the pollution and the inflation rate” Conveniently ignoring the Proof of Work pollution from Ethereum allowing Hex to exist. Then consider that the inflation rate to the retail class (non-RH holdings) is 40%, in that best case scenario that RH sends his 90% holdings to a burn address.
      It’s game theory all right, that’s all it is. To make money, you have to game other people out of their money.

      1. Oh my goodness man, that was surely a Bitcoin maximalist comment. Do you think a computer running an algorithm is also “mining”? With this logic BTC mining pools aren’t “mining” anything either since the definition of mining means to extract minerals from the earth. Sigh… The above poster left a perfectly good explanation of the HEX supply inflation mechanics in relation to Bitcoin’s. Would you feel better if HEX stakers were running computers that wind up costing massive energy bills (which some governments hate), hiking the price of video cards for gamers by 4 times, and dumping the supply to pay their electricity bills just like Bitcoin? Would that make things better in your head?
        Put your maximalism aside for Christ Sake. HEX is doing exactly what Bitcoin is doing but better. It’s not a scam and it’s not a ponzi. It’s already over 2 years old and you will not find a single victim of this scam in your mind. But what you will find is testimony after testimony of people’s who’s lives have been changed including mine. So unless you are against people gaining wealth please just stop it. We get it you loyal to Bitcoin, just like people were loyal to MySpace when Facebook was a better product.

        1. It doesn’t make one a Bitcoin maximalist to just point out distinct differences of the purpose of inflation. The guilt by association is misplaced because I don’t even own Bitcoin right now (occasionally I trade it), almost two years ago I published an article on Bitcoin with a lot of criticisms, and almost all of my holdings are in PoS systems.

          I didn’t invent the term mining, it’s the popular parlance for adding blocks to a blockchain. There is no blockchain for Hex, so Hex isn’t doing “the exactly what Bitcoin is doing but better.” Those $100 gas fees that Hexicans shell out each time they use Uniswap, lock, or claim is paying for part of the energy bills of the miners performing work on the Ethereum blockchain, so even though you may not be running graphics cards, you are paying for them indirectly.

          No, creating a PoW blockchain just for the sake of it is a pretty pointless exercise. I would feel better about Hex if it actually generated revenue and didn’t have the founder owning 88% of it.

          The interesting thing about Ponzis is that victims don’t know they are victims until many years later when they need to extract their investment and find out the emperor wears no clothes. The fact that it is only 2 years old is exactly the point because Ponzis by their very nature take time to fail. It took Bitconnect two years to fail after some governments started issuing notices and it took 3 years for OneCoin, but those were technical ponzis with centralized systems, so Hex has potential to go on for much longer since it’s a decentralized token battling out the effects of “onboarding” new users, aka shilling, versus inflation dilution.

          Early investors have a unique experience that will not translate to later investors and this applies to everything including Bitcoin, Ethereum, etc. that have collectively produced millions of millionaires. When an asset has already 1,000x+ and is worth hundreds of billions of dollars, it’s much less likely to 1,000x again in the future. Think of it this way, if your $1,000 investment grew to $1,000,000, that means 1000 later $1,000 investors need to pay for your bags.

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