Hex casts spell over hoards of devotees, but observers raise eyebrows

The more than 100,000 devotees to a little-known token called Hex swapping jokes and encouraging each other to stay bullish over the Telegram messaging app shows the desire to get rich quick remains as strong as ever in the midst of the latest crypto winter. 

Even though the coin is among the thousands that trade at just a few cents, it has developed an outsize profile. Hex’s creator, who goes by Richard Heart, has positioned himself at the centre of the hype, projecting an over-the-top presence on social media with his designer track suits, expensive jewellery and luxury vehicles. While Heart projects endless optimism amid aggressive marketing, which includes old-fashioned direct-mail promotions, the value of the token has tumbled more than 90% from its record high in September. 

But what really stands out is how Hex dangles a road map to great wealth for so-called Hexicans. Hex is an app on the ethereum network that offers a staple of traditional investing packaged in a crypto wrapper in what it calls a “blockchain certificate of deposit.” Users lock up, or “stake” the Hex coins they’ve purchased from the app for up to 15 years to earn interest paid off with more Hex tokens. Hex’s website says the typical investor locks up their funds for 6.6 years to earn an average 38% annual return. 

That has raised eyebrows among industry observers, especially in light of the recent collapse of the TerraUSD stablecoin and related Luna token, and the freeze of withdrawals by lending platform Celsius Network, which were also dependent on promises of high-yielding returns to attract steady streams of new investors. Meanwhile, Heart said he’s developing a network called PulseChain, which will eventually issue tokens that will be distributed to Hex holders and other ethereum users. 

“Hex increases in value the more people put money in and decreases when people pull money out,” said John Griffin, a finance professor at University of Texas at Austin. “The last people in will likely be left with nothing.”

Heart, who told Bloomberg News in an interview that his real name is Richard Schueler, remains undeterred. Hex’s direct mailings and ads on the sides of buses in places such as London noted that once the price went up “11,500% in 129 days.” As of late, the coin’s fortunes have mirrored the recent crypto boom and bust, with its price falling from a record high of about 50c in September to about 3c. 

“How many things lost everything, Luna went to zero,” Heart said. “Rug pulls everywhere, bridge failures. You’re just like, ‘We are the only ones doing it right!’”  

Heart declined to disclose the size of his personal Hex stake, but likes to say that no-one minds that bitcoin’s supposed anonymous creator, Satoshi Nakamoto, holds a huge swath of bitcoins. About 300,000 accounts hold Hex, but it’s unclear how many people they belong to, according to blockchain tracker Elliptic.

In addition to locking up their tokens, Hex owners can also contribute a portion of their holdings to one of two digital wallets in exchange for points that can eventually get them more PLS tokens, the PulseChain currency. The idea is to move Hex onto the blockchain, to make staking and unstaking Hex cheaper, Heart said. PLS tokens will be issued once PulseChain goes live.

Between 40% and 50% of the Hex in circulation over the past year has been “sacrificed” to the wallets, Heart said. One is designated to fund anti-ageing researcher Sens Research Foundation. Who controls the other, and larger wallet, isn’t disclosed. Heart declined to comment on whether he is the owner or who controls the anonymous wallet. 

The devotion of the Hexicans is extraordinary even for the crypto world. Heart’s face is splashed across many Twitter profiles of his followers. The testimonial section of Hex’s website is stacked with claims that many Hexicans got “houses, cars, watches, paid off mortgages and student loans” with their Hex wealth. 

“They consider Richard to be a god inside the Hex community,” said Eric Wall, former chief investment officer at Arcane Assets, who considers himself Heart’s friend, but declined to say if he is invested in his projects. “The Hex project, in my opinion, is a rather pointless cryptocurrency. The only thing you can do with it is lock it up, and the longer you lock them up, the tokens inflate. That’s the whole idea.”

Before Hex, Heart says he once ran a stereo store in Florida before starting a search-engine-optimisation company and a foreclosure company, among other businesses. He was once fined in Washington state for sending spam email. He started mining bitcoin in 2011.

Roger Ver, one of the early advocates of bitcoin, said his Bitcoin.com exchange was one of the first to list Hex after it first debuted in 2019.

“He is knowledgeable about the space, and a competent communicator,” Ver said about Heart. “Many people hated Hex when it launched, but even bad assets should be tradable.”    

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