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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. I’ve been in Crypto for 4 years (not very long) and I have never seen anything like this. I spotted this token when it was trading around a penny and passed on it because my ‘gramma’ said “If its too good to be true, it probably is”. Well not so in crypto. Warren Buffett and Charly Munger still don’t get it. I had to buy back higher after doing my research and averaging in. Also HEX is uncorrelated with the rest of the market so even if you don’t like it, its a hedge on your portfolio. And all this hate on the OA (origin address) is misdirected. The OA stakes just the right amount to allow for a good amount of the APY to be enjoyed by the staker class.

    This isn’t a Biconnect or Safemoon pozi scheme that reward you for money you didn’t earn and purley from new commers. That pyramid eventually collapses. The inflation in HEX goes directly to the stakers and you being paid to be patient not necessarily for “doing nothing”. As a trader, sometimes the best trade is no trade. Fear and greed will draw you in to make mistakes and sell your bags early. HEX provides an incentive for people to just stake and chill. Not only because the penalty for end stake is severe but for the opportunity to earn more APY on ever dip. This helps people NOT become degenerate traders and go do something else enjoying life for the length of their stake.

    1. A lot of the crypto that exists today will implode with enough time, so just because it has worked in the past doesn’t mean that it will work in the future. Your penny story exemplifies a lot of this, the FoMo that you could have gotten in early sucks people in and keeps it going for a while. You never really know if you are the last guy buying or not though.
      I agree that the Buffett crew doesn’t get crypto (I mean how could a 90 year old understand virtual currency?) and there are some potential real world solutions for it, but everyone getting rich is just not a possibility as most crypto projects just shift money around from later investors to early investors.
      The apparent negative correlation of Hex is quite interesting.
      “The OA stakes just the right amount to allow for a good amount of the APY to be enjoyed by the staker class.” He could send all the OA to a burn address, but the fact that he doesn’t is telling about his future intentions. The 90% supply that he controls also allows for the advertisement of 3.69% inflation, when in reality it’s 40% inflation to the ‘staker’ class.
      “The inflation in HEX goes directly to the stakers and you being paid to be patient ” Inflation isn’t real money though, it’s an illusion. It’s an expansion of the money supply, just like how the USD has lost 30% of its value in 10 years. There are other projects that have a long lock in period, like Internet Computer. They are down like 90% since their ICO this year though. I do think that more projects should incorporate the long lock up period option for higher rewards. I’ll give RH credit for that idea.

  2. So just asking, you would be smart to invest in these types of scams if you are a first adopter/early to the game?
    You said in your article if you make it early enough, you can make money and just screw over the later investors but if you make money, who really cares about them?

    So if you could go back in time right when it opened, would you invest?

    1. No, because by participating you are just perpetuating it and harming others later (and you never really know if you are the last bag holder buying anyway). Plus if we really want crypto to succeed and be useful, the scams have to stop otherwise enough people will stop participating and the nanny state comes in and starts regulating everything.

      1. I mean it is their fault in the first place if they get scammed but ok.

        How about his new coin coming up, PULSEX? Have you read into that anymore?

        1. That’s kind of a mean way to look at life.

          So I looked into the PulseX (PulseSwap) and of course he has baked into the pie a cutout for himself. He advertises that it will have a 0.29% fee to swap, which makes it cheaper than everything out there since everything else charges 0.30%, but then he takes 0.01% for himself, so it’s not actually cheaper. Uniswap trades $150 billion a year so even if PulseX gets 10% of that volume he is going to earn $1.5 million a year. At least in this case he’ll be providing an actual service. But just funny that, of course, he gets a slice of everything.

          Unlike Uniswap, LP providers in PulseX are only getting 79% of the fees, which is about 21% lower than is typical. He also states that those 21% of the fees “could” be used for buying LP tokens. That wording tells me that 21% will go to many other things other than buying LP tokens, and probably straight to another personal piggy bank “origin address.” It’s not launched yet, so we’ll have to see, but that’s my bet.

          The “sacrifice” wording to get PLSX tokens seems to be an attempt to again get around ICO SEC rules by pretending it isn’t an ICO and declaring that the new tokens will have zero value. He states “You are making a political statement” by “sacrificing” your crypto. “Whoever owns your crypto after you sacrificed it does no work for you”. Gee, wonder who that “whoever” guy who takes ownership of the crypto is.

          Also, he is employing the “act fast” marketing tactic to get you to sacrifice before Jan 10th because the points value per dollar contributed goes down 5% each day after that.

          1. The 0.01% that goes to an unknown place, I thought it was out of that 0.29%.

            All in all, you seem to not have much bad to say about PulseChain, based on this comment. I haven’t checked if you have talked about it elsewhere.

            1. Maybe, but the way I read it was 0.29% + 0.01% = 0.30%, which would bring it up to typical DEX prices. I haven’t written about PulseChain anywhere else, just in these comments.

              No real complaints with Pulsechain yet since it is still a testnet, other than it being Proof of Staked Authority with RH the authority controlling 90% of all tokens. A lot of people don’t seem to understand why centralization is a problem, but it means that RH will have the ability to change transactions or roll-back transactions, steal funds, etc.. Even if he has good intentions, what if a criminal organization captures him and starts chopping off fingers until he is forced to do what they ask? Single points of failure in crypto are a huge risk.

  3. That was incredibly thorough and an eye opener! Appreciate the work you put into this. It’s substantial. Specifically on RH just recycling funds through multiple accounts to pump the perceived user base. That was the biggest point for me that I was worried was happening, that and the origin wallet in general and the vague explanation of who controls it.
    This situation is very similar to what was happening in Amazon with buying your own product to spike the algorithm into increasing your rank and thus increase traffic /sales.
    However amazon came down hard on that just a month ago.
    If at any point regulation comes in to audit that origin wallet and follow the trail it’s gonna be a big problem.

    I’m curious if you’re following what RH is up to now with PulseX? Which will be going into sacrifice soon.

    1. I also wouldn’t be surprised if a lot of the volume is wash trading just to pump the numbers up, but it would require a chain analysis program to find that out. See my comment above in regards to the PulseX

  4. Great Analysis Ryan, i try to tell other Hexicans that this whole thing is a ticking time bomb, and there only argument is the price is going up, ive been kicked out of groups and silenced several times. Whats funny is alot of the followers that have made alot of money are just staking longer 5555 to show their appreciation, they think RH is god and a genius and HAVE NO EXPECTATION OF PROFIT.
    RH even said Hex might reach a million dollars one day?? Hes just raised nearly a billion for pulsechain but now thinks it necesary to do another sacrifice for pulseswap. Perhaps RH is selling off wallets into these new buyers?
    It seems the end is near, the only reason hex is pumping now is because people are buying hex to sacrifce, or buying hex so they can get a copy on pulse, ive looked at the top 2000 wallets, and all have more value than could ever be sold without crushing the price to zero, and when Pls launches there will be 2x as much hex.

    1. Hexicans seem to regurgitate everything RH says without any fact checking. I saw the video with his claim of the $1 million per Hex and couldn’t believe that he didn’t instantly lose a lot of credibility with his cult following, but the group does seem to be either exceptionally gullible or ultra greedy to the point that reason escapes them. The total supply of Hex today is 633,542,658,973 tokens, so even at $15 a token it would be rivaling the entire amount of gold in the world.
      It’s a good point that when they fork Ethereum there will be twice as many tokens. Furthermore, it’s going to a be a Proof of Staked Authority system and ‘I wonder who’ is going to be the authority in that one. That’s why I don’t see Pulsechain taking off. Why would anyone choose Pulsechain over Binance Smart Chain for basically the same functionality? He’ll probably bake in some tax that funnels into another personal piggy bank ‘origin wallet.’

        1. I’m more of a written word kind of guy because I like to fact check claims and link to data sources where available, neither of which is really conducive with a live debate format.

          1. Hi Ryan, Would you be willing to have a Live Streamed Debate/Interview/Chat with RH if it can be set up?

            Your article is very thorough and you know what you are talking about. If you are trying to help people not fall for a scam, video/youtube would be a great medium.

            If you do agree I will do my best to get RH to have a chat with you.

            1. Again, I have a preference for writing so that time can be taken to research any unknowns, facts, figures, etc.

  5. He has. He gets i think 2% of all sacrificed funds. I still dont get why people are arguing his side in this group. Everything you say is spot on. There wont be any legitimate daps being built on pulse, just absolute crap. And i dont see any new customers being there on launch. All the customers have sacrificed all their bags. Any potential new customers will now be sacrificing for pulsex. 60,000 sacrificers, only 55,000 telegram members. Whos going to buy the bags? And with a slither of liquidity. There will be alot of unhapoy customers.perhaps rh will use tormadocash to use the sacrificed funds to pump it for everyone

      1. Richard heart and his anonymous small private group of investors partner will be using their own funds or Hex fund, which is only on paper worth millions, to prop up the amount of dollars sacrificed, like they did with pulse chain. Then those money goes right back into their pocket cuz Richard heart own the sacrifice wallet. Then the hexicans will get all excited and bragg how much money is sacrificed and how the whales are sacrificing millions cuz they believe in the project but those whale are actually Richard himself and his small circle of his friends.

  6. This is a decently researched article with some flaws. Here are two flaws in one of your sentences: “Market cap is essentially the “account balance” of all token holders in the system and the volume is the capacity to unload those balances.”

    You are saying volume is what is needed to unload or sell your hex balance. In traditional markets volume could be an indicator that there are enough participants to have buyers in order for you to sell but the actual important thing is the liquidity. Liquidity is what gives you the ability to sell. Hex has low volume but it has plenty of liquidity. Any user who wants to sell will be able to sell because there is liquidity. There are buy orders waiting. You can see this on the decentralized exchanges that Hex is traded on.

    The second flaw is that market cap maters in crypto. This matters in a traditional market. But in crypto, market cap does not matter. Here is an example. I create a crypto coin with a supply of 1 Trillion coins. I make one sale to my friend who buys one of my coins for $7.00. My coin now has a market cap of supply x price = 7 Trillion dollars. Just because the market cap is 7 Trillion there is no way I could extract 7 Trillion dollars out of my coin. Supply times price is not a reliable metric in crypto. It’s more of a guideline.

    1. Fair point that the liquidity is handled a little differently with DEXes, as the size of the liquidity pool is a relevant factor to how much capacity. It looks like there is about $21 million in UDSC and $1.4 million in ETH available to trade for Hex right now (varies by day), however, Uniswap V3 complicates the picture a little bit because of the new feature that lets users target a particular range of liquidity. While you can see the liquidity graph, unfortunately you can’t drag a range to see exactly how much capacity for selling is available in a particular range. By my estimate it only takes about $2 million in selling to knock the price of Hex down 10%. The thing that is most interesting to me is that most of the liquidity is on the higher price range meaning that Hex LP users are willing to unload at higher prices, but not as willing to buy at lower prices (except with the huge blocks of buying capacity at 0.065, presumably RH’s backstop). It’s much easier for it to fall back to 0.25 than it is to claim 0.37.
      Hex Dex Liquidity
      Do you know of a better resource for this kind of analysis?

      Per the market capitalization, people make that argument all the time, and at least one other person in the comments has said something similar. I completely disagree for three reasons: This is why volume relative to marketcap is important because if a coin has $1 trillion dollars but only 1 unit traded, it will be obvious to all that the price is purely manipulated. Some people used to mess with the coin ranking sites by doing exactly that and so ‘material volume’ became a factor in the rankings to prevent these joke coins from jumping to #1. The first time another person who obtains some of these joke coins tries to sell, there will be nobody to sell to and the price will plummet to zero. Basically its the definition of a rug pull.
      And as mentioned, market cap is the aggregate of account balances, so the ownership proportion of the pie is what each Hex owner thinks their bags are worth and market cap multiplied by the inflation rate determines the value of new tokens entering the system. Market cap is very informational.
      RH loves to say that market cap doesn’t matter only because he controls 180 billion of the 200 billion pie and doesn’t want you to think about that fact.

  7. Mad thing about Crypto though. Is that pulse will probably still perform very well. Seems dog coins, cumrockets and blatant ponzis are what has took over crypto this cycle

    1. Very true and with a community of adherents which all of these tokens have, who knows what will happen at least in the short term.

  8. 200billion coin worth 20million, that is the entire debate ended really. If they cant see that, they are blind. Its like a room with a pile of 20million cash in the middle, and 100,000 people holding the same winning lottery ticket. Only reason no one has cashed in because the lottery has told everyone there also entered in the euromillions and they might be able to win 2billion

    1. Also Hexicans are very delusional they believe the price of hex will be $100, $10,000, and even a 1 million per hex in future, if that’s the case The top 200 address will be trillionaires. On paper they will be richest on earth.

  9. It’s funny how an expert try to destroy hex but at the same time missed the opportunity to make huge profits. If you dislike a million dollars from 100 I understand you are looking for a better investment.

    Let me know when you find a hex holder who has had hex for at least a year and is honestly critical as this article on his gains.

    1. I didn’t even know about Hex a year ago, so it wasn’t a missed opportunity for me. Check the comments above and there is a Hex holder who was early, sold and made money but is critical of the token.

      My article was written for those who have recently discovered it and want to know how the token works and what is does. You can’t fire up the time machine and go buy it a year ago. What matters is how the token will perform in the future and anyone who buys in at this late of a juncture will likely be disappointed.

      The truth of the matter is that most of these Hex holders who think they have a million dollar balance today won’t ever be able to convert it to real money because the liquidity just isn’t there to support it. Plenty of those early investors who put in $100 and now have that life changing $1 million will dump their bags onto the market as soon as their lockup ends and all that extra supply is coming to the market. If a small percentage of all of them follow suit, the price won’t ever be able to recover. 2.45 billion Hex tokens lock-ups ending this month alone ($490,000,000), but I am sure a lot of people will defer and hope it bounces back now that the price is down 50%+ from the high.

  10. Ryan, thank you for your work. I am Just wondering what will be the impact of pulse x sacrafice / launch. Price dump on HEX and moon for pulse x? In Short term of course. Do you have any idea how much money he would need to raise to effextively launch „uniswap”? If he does it effectively it could be good potential for his future wallet. And for early participats as well. P.s more and more i fluencers are shilling for hex & pulseX (jo parys for example). Maybe from initial scam it will go to a Real thing?

    1. He’s probably just forking the code, so it wouldn’t take much money at all. The sacrifice is just another way for him to fill his own bags and make tens of millions of dollars with an illegal ICO.

      As for how PulseX will perform, on one hand, the tokens for Sushiswap, Pancakeswap and Uniswap have had a pretty “meh” performance since inception comparatively. On the other hand, RH has a cult like following of 90,000 that will buy 10 of anything he sells. Also, since it will be a real product performing a DEX service, it will legitimately generate revenue and if the stated ‘29% of revenue “could” buy back PLSX tokens,’ then it will further drive up the token price. So, I would lean on the side of seeing good performance out of the PLSX token, but I’ll bet those buy-backs don’t end up in a burn address. It could be an interesting project to inspect for RH perks once it launches.

  11. Interesting article, you’ve clearly spent a lot of time on it.

    I have questions if you don’t mind.

    If this is a scam, why hasn’t richard just taken the money and gone by now? He has access to a billion dollars, if what you say is true. All scammers don’t stay more than a year. Two years seems a bit long for a scam, when he can have so much money.

    If Richard is taking money out over time, does it matter? All Crypto founders are doing this same thing. Everything you’ve talked about, could be attributed to any crypto surely? If people held, any crypto would go up (have you seen the communities of Shiba and safemoon? crazy!).

    I respect your column and definitely not shilling anything, but I not seeing how Hex differs from any other crypto where you can stake? Staking is definitely used by many other cryptos.

    1. I can’t get inside his head but there are a few possible reasons. 1) He can’t dump his $150 billion in Hex tokens without tanking Hex to zero on the first batch of $20M. He needs a huge expansion of Hex buyers which will require the long game of slowly selling a little bit of his holdings here and there. I can’t say for sure how much he has rat-holed in different addresses (that one Ether link shows $330M), but there’s one thing about greed: you can never have too much money.
      2) In his YouTube videos and the coming documentary he procured for himself he states that “he is in it for the glory.” He is a vain person seeking lots of status and so if he just disappeared and rug pulled he would lose his large cult following. He’d possibly also be sought out for legal prosecution because when account balances drop to zero people suddenly have a great loss that they want back.
      3) He wants to roll onto other projects like Pulsechain. It’s a chance for him to become legit with a product that actually has a purpose.
      4) Maybe he buys his own BS, although I doubt it. Any intelligent person can’t believe that wealth is created by just printing more units.

      I don’t have a problem with a crypto founders making money, but two things: 1) there should be a cap on their ownership for decentralization purposes, rug-pull risk, and just general fairness. 2) the product actually has to have a use case to produce real revenue (at least in the future).

      How is Hex different? Well the definition of staking is misrepresented, which fools people into thinking they are buying the latest crypto tech. The many other projects that only pay inflation as earnings are also fooling their holders, but just because “other people are doing it,” doesn’t mean that Hex gets a pass. These other projects don’t market the rewards as “interest” or sell themselves as an investment product which is a major distinction.

      1. Thankyou for the reply. Plenty of stuff to think about, not just with hex, but the whole crypto market.

  12. Really good writing. I agree with some points and disagree with some.
    At what point would you say it was not a scam? When in 2025 you look at the chart and it still goes up? Or 2030? 2035? When?

    1. It’s not the price level a token can reach that determines whether it is legit or scam. That just reflects the marketing influence and product features that reduce supply. It’s the features of the product that matter. So, never.

      1. So let’s suppose we are in 2035. The price is $1000, all the Hexicans are millionaires and billionaires, there are millions of people staking (currently there are only 74000 stakers) and you will still shout scam instead of joining the winning team?

        1. lol, again, just because a Ponzi gets bigger doesn’t mean it becomes legitimate. I know that RH shared his wisdom on a YT video that Hex might one day reach $1 million per token, but do you actually believe that even $1,000 is possible? I ask, does a Hexican do arithmetic? Don’t trust, verify.
          633.542B total Hex supply * 1000 = $633 Trillion, which is 50% more than the wealth in the entire world. The new tokens minted on average each year would have a valuation of $23.3 Trillion, which is almost the USA national debt. Even $10 a token is really pushing the limits of reality.

  13. Just been looking over the sacrifice amounts for pulse+pulse x. Nearly a billion on each not including OA. Whats concerning is 90% of it is hex. Which only has a value of around 20mill. How exactly will pulse not be a complete failure. Richard seems a pretty clever guy, he must know the shows about to end

    1. I’m sure the last thing that RH wants to receive in the sacrifice address is more Hex since he already has $150 billion of it that he can’t get rid of. I am surprised that he didn’t specifically request anything other than Hex and come up with a story about why he needed more Ethereum, but maybe that would have been too obvious.
      I don’t think it takes that much money or hardware to run Pulsechain though. It’s not going to be decentralized at launch so he probably only needs 1 or 2 AWS machines processing transactions which will be few in the beginning anyway.

  14. I watched the big short last night. Hex reminds me of the housing stock market, and its about to crash. And all the hexicans have no clue, and ignore the maths. Is there a way we can short hex. Im huessing no one is selling now untill the snapshot

    1. I expect it to drop after the snapshot date as well since the preferred Hex will then be the pHex and with twice the Hex supply the old, high fee eHex will have to give. Buying pressure will diminish, but it will be interesting to see if a lot of people emergency unstake their eHex to unload it.

  15. Phenomenal piece of work. You may want to look into a project called DRIP that’s been shilled quite a bit the later part of 2021.

  16. Awesome analysis and very thorough. I wish I had found this article earlier. I was looking for info regarding Anchor Protocol and found your article.
    I couldn’t find out where the inflation was coming from and asked many questions on one of the telegram group, and a guy quickly got angry. I am just willing to dig in the topic I said. If there is something I don’t get, it bothers me and I hate repeating what someone else says if I don’t get it…
    Anyway, I have one question about your article. Why do you say that all the unlock coins keep the ‘interest rate’ high. From my understanding the contract generates 3.69% of inflated supply every year. Where does that 40% come from? By distributing the unlocked tokens?

    1. Yes, Hex inflates the pool by 3.69%, but only those who lock their balance get a share of that 3.69%. Therefore, if everyone were to lock up their tokens, the maximum return would be 3.69%.

      RH: “well gee whiz, if anyone buys my token, since they only get the interest if they lock their balance, naturally 99% of the people are going to be locked at any given time and the maximum 3.69% ‘interest rate’ just won’t seem that impressive. How do I get that interest rate up to 40%? Change the contract rate inflation to be 40%? Nah, that would be too obvious. Ahh, I know! I will create millions of extra tokens to just sit around, so a great number of extra tokens will be created from their inflation value and then just funnel them to the locked balances. Then I can still set the contract inflation rate to 3.69% and the 40% returns will look like magic!”
      Or as a formula:
      Inflation tokens = 3.69% * ( retail class + RH stash ), the bigger the RH stash is, the greater value of the inflation returns while keeping the total Hex capital pool inflation rate fixed at 3.69%.

      To put some numbers on it, say the total Hex marketcap is $150 billion today then $132 billion of those are RH stash tokens that exist just to generate additional tokens for the benefit of the $18 billion in retail locked tokens. The market and price for Hex is determined by the actual investors buying, selling and locking their Hex tokens, the retail class that owns the $18 billion. The $132 billion aren’t in circulating supply because if Heart tried to sell them to the retail class and place them in the hands of market participants, the price of Hex would instantly drop to 0.000001. There would be just way too much supply.

      The return formula incentivizes longer term lockups, but the concept is roughly the inflation rate divided by the locked percentage to get the purported rate of return. With the 88% superfluous token share a 3.69% rate of inflation translates to a 30.75% ‘interest rate’ (3.69% rate / 12% locked = 30.75%).

      So, 3.69% of $150 billion is $5.5 billion in inflation that all funnels towards the remaining $18 billion in retail holdings. $5.535 billion / 18 Billion = 30.75%, magic! Retail Hex market participants are experiencing an effective 30.75% rate of inflation. See this is why its a slick scam – it looks like you are out earning the rate of inflation by a wide margin, but in reality the entire retail circulating supply is just inflating at the purported interest rate. Again this shouldn’t really be a surprise to anyone who knows that products without revenues can’t actually generate a real return.

      How could have Richard Heart increased returns even more by keeping the inflation rate the same? Just add more unlocked tokens. For instance, if Richard Heart had arbitrarily doubled his token share to $264 billion, then that would translate to a 93.6% ownership stake and the same $18 billion in retail locked value: 3.69%/6.38% = 57.8% ‘interest rate.’ Nothing changed except the superfluous token count creating more tokens headed towards the retail class.

      1. I REALLY wish your article was here before I made my stakes with Hex, everything of what you point out explains this coin and most of the crypto market out in plain language.

  17. First, a thanks for your excellent article. My Uber driver was listening to an interview with Richard, so I ended up listening to him on my way to the airport. Since I missed the beginning and the end I didn’t catch the name of the crypto that he was hawking or even his last name (though in retrospect I remember him talking about why he chose the name Heart rather than Hart, but I thought he was talking about his company not his last name!) , but your write-up was thorough enough to for Google to match up what I did heard with your article.

    I’m a crypto skeptic, but it was clear that Richard was charlatan of a different order. Aggressively self promoting, while making sweeping-sounding statements almost entirely devoid of content. The interviewer was fawning and I wonder now if it was a paid placement.

    One thing that I would add, that probably would irritate many of the commenters here, is that Heart’s crypto is more than just clever scam, it’s an ethical dilemma: if cryptos aren’t scams then Hex isn’t one either. Why? Because Hex is in fact a real crypto, (maybe not a very good one but certainly one that meets the minimum requirements) and if we assume cryptos aren’t scams, then they must be real assets and it’s entirely reasonable to create time-deposit financial products from them. In some ways Heart is doing us a favor by illustrating what a dangerous, viral threat cryptos and meme-finance generally pose to our financial system.

    1. Correct, a complete deterioration of our system. People hear the sh*t about inflation and everything and instead of just holding on to their real money, they “invest” in “assets” like crypto not fully understanding that the sh*t is actually all meme-finance that should not be taken seriously.

  18. Great article and discussion thread. Thank you for laying out so much evidence in a non biased way.

    I’m invested in HEX for some laddere stakes but in amounts I can afford to lose.

    It will be interesting to see if and when pulsechain launches where all the RH projects end up.

    Any project in crypto I lime to take with a good pinch of salt. Spread risk and know that any of these assets could easily crash to near zero.

  19. Thanks for this in-depth article. It has saved this Average Joe from losing a decent chunk of change.

  20. As with any investment, only invest what you are willing to risk. I bought a bunch of HEX, and sacrificed to get Pulse X coins (because I missed opportunities to buy ETH in its early stages and didn’t believe in crypto). Also staked HEX as well. Very interested to see how all this pans out (taking a leap of faith, and am one of the most skeptic people about crypto, but am opening up to it).

    My two cents after watching nearly every Youtube video, and reading articles like this is:

    Hex, Pulse X, and Pulse Chain is creating an ecosystem that theoretically should change crypto users’ economic behaviors by having lower fees and faster transaction times, but also the biggest air drop into Pulse Chain. I’m not going to say that HEX, Pulse X, and Pulse Chain is equivalent to Steve Jobs debuting the iPhone in 2007 at this point in time before the Pulse Chain launch.

    However, if this ecosystem works and in 5 years or less the valuations are there for HEX, Pulse X, Pulse Chain and Pulse, then it will be considered a great investment.

    Another analogy, for you football fans out there, you can’t grade a draft class until at least 3 years later.

    Anyways, as with any investment, do your own due diligence. I hope that HEX, Pulse X and Pulse Chain works. If it doesn’t, oh well. Again, I invested an amount that I am willing to lose.

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