Concerns are growing over the fate of ETH investments in a crypto token project known as HEX, led by social media personality Richard Heart.The concerns stem from US$6.5 million in funds moving from an Ethereum address investors paid into to buy HEX tokens.Observers have noted that 36 transactions, each worth 1,337 ETH, moved from HEX’s “origin address” a few days ago.That’s worth about US$6.5 million at press time and could change, given ETH’s fluctuating value.It also appears the ETH has not been moved from those addresses since, meaning they haven’t yet been sold.
The origin address still holds 2,869 ETH (US$392.75k) at press time.
Heart has defended the transactions on Twitter and elsewhere, claiming funds are “supposed to move.” Observers have speculated that funds may be going towards boosting the HEX price, although this is difficult to verify.The amount of stupid on crypto Twitter is amazing to me.Truly.
So many articles about ETH moving in regards to HEX.It’s supposed to move… Why wouldn’t it? Why are you idiots yelling about a system working as intended? Anything for a click I guess…
— Richard Heart (@RichardHeartWin) January 8, 2020
Richard Heart was known as a Bitcoin maximalist and cryptocurrency trading commentator for several years before starting the HEX project.He has regularly accused Dr.Craig Wright of falsely claiming he is Satoshi Nakamoto , and suggested those claims are an attempt to fool the Australian Tax Office and the family of Dave Kleiman.For example: https://youtu.be/lPbh2ltm1wI
Heart’s official YouTube channel has over 43,000 subscribers.
He has 52,200 followers on Twitter and his “Richard’s calls” trading channel on Telegram has 7,900 members.He has also presented at blockchain and technology conferences and regularly appears for interviews on others’ channels.
The name “Heart” itself is a pseudonym.Researchers have pointed out that Heart also appears to be Richard James Schueler , a long-time online marketer who has previously promoted life-extension products and was named the “Spam King” after being sued in 2002 for violating anti-spam regulations.He is also alleged to have used a number of other aliases.
Life-extension promo video (Richard Schueler): https://www.youtube.com/watch?v=NhLipY8i1rU
What is HEX?
HEX is touted as “the first high interest blockchain certificate of deposit (CD)” and offered “stakers” an opportunity other cryptocurrencies didn’t give them: the ability to earn interest on their holdings.Following a long build-up and promotion period, it launched in December 2019.
Certificates of Deposit (CDs), or term deposits, are a common financial product offered by almost every bank and credit union.Depositors leave their money in the account for a fixed period of time, during which they can’t access their funds, with the promise of a higher rate of interest than a regular deposit account, paid when the term expires.
The difference is that banks are actually investing the money deposited, and that generates the returns—and they’re accepting currencies the world actually uses, not a brand-new crypto token with little real-world utility.
The multiple websites offering information on HEX use a number of classic internet marketing techniques, such as: continual pop-up windows with sign-ups and offers, links to “affiliates” offering bonus rewards, and creating a sense of urgency by reminding investors that getting in early would increase returns, which would decrease the longer they waited.
There were/are two main ways to acquire HEX tokens.
One was to provide a BTC-holding wallet address, which would pay 10,000 HEX per BTC via a snapshot of address value at launch time.The other (ongoing) encourages stakers to “transform ETH into HEX” by paying into a smart contract.
HEX uses a number of complex mechanisms (called “adoption amplifiers”) to promote itself and encourage investors to boost their holdings in the hope of making a profit.
Like regular CDs, investors “stake” their funds in the ETH contract/account and can add to them for a set period of time (in HEX’s case, three years) in order to receive a payout when timed deadlines are reached.There’s a “staking bonus” paid out after 353 days, when the “launch phase” ends.Also like CDs, there are penalties for withdrawing funds.HEX tokens are also traded on a number of digital asset exchanges.
Incentives include daily bonuses (paid in HEX) and there’s a 10% referral bonus if you bring others into the network.
HEX claims to have tens of thousands of users, it has a large following on Twitter, Telegram, YouTube and Reddit.A press release dated January 10, 2020, announced HEX had “a very successful first month, with well over a billion dollars in Bitcoin claimed and 50k Ethereum transformed into HEX coin.”
It’s worth noting that the “billion dollars in Bitcoin” is not actual money invested, but a reflection of how many people used a BTC address snapshot to get free HEX tokens from the airdrop.
Users still hold their own BTC.
The money “transformed” from ETH, however, does represent money invested in HEX.The ETH “transformations” are where HEX makes its money, not the Bitcoin-snapshot airdrop.
Like many ERC-20 token sales of the past, HEX’s price chart looks like a patient that experienced a sudden shock and then flatlined.Its unit price rocketed to $0.001158 on December 16th, 2019 and almost instantly tanked, falling to $0.0002 within a day and staying below $0.0001 since the start of 2020.
In YouTube interviews, Heart has cautioned the value of HEX could rise and fall dramatically.However the vast majority of written material on HEX information websites talks about value growth, and appears to ordinary readers’ eyes as promises of large gains.
“HEX is designed to go higher, faster, and retain its value” goes another site headline.It uses “a computer science breakthrough to disrupt the largest markets in the world with a product of nearly infinite profit margin.”
It then adds, “HEX aligns incentives, so the more people that participate, the better everyone does!” This is stating the obvious, since a large number of buyers, speculators and traders would boost the price of any asset.
The project website does mention the possibility of a founder exit-dump (aka exit scam).However it reassures potential investors by adding that “HEX still works” even if the founder leaves:
HEX is not immune to these concerns, but it does answer them effectively.The short answer is that a founder dump, even if it happened, could not kill the currency: its functionality is not dependent upon the Richard Heart post-launch; everything is programmed into the smart contract.
It also repeats that “HEX is not a security,” a line often used by token sellers to avoid regulatory action by institutions like the U.S.
Securities and Exchange Commission (SEC).
Another token sale with dubious claims—so what?
Why would anyone in the BSV ecosystem care about investors throwing money at yet another dubious crypto token scheme? There have been hundreds of them in the past 10 years, many of them reaching facepalm-inducing levels of marketing incredulity matched only by their supporters’ passionate defenses of their doomed investments.No amount of warning can deter those who believe some guy on the internet just showed them the secret formula for wealth.
The reason is that Heart’s regular criticism of Dr.Wright, even going so far as to heckle him from the audience at the AIBC conference in Malta in November 2019.
CNBC Crypto Trader reporter Linda Joo also uncritically interviewed Heart at that event about his opinions on crypto scams, while subjecting Wright to a stern-faced questioning and appearing to mock him later on Twitter:
Richard Heart segment:.
