Wolf of Wall Street author Jordan Belfort warns cryptocurrency ICOs are ‘the biggest scam ever’ – here’s why…
Initial coin offerings described as ‘biggest scam ever’ by Jordan Belfort
Former penny-stock broker turned author’s book was made into film
Now Belfort warns about cryptocurrencies – a month after watchdog warning
By LEE BOYCE
DAILYMAIL.COM
23 October 2017
Initial coin offerings have been described as ‘the biggest scam ever’ by former penny-stock broker turned author Jordan Belfort, who wrote ‘The Wolf of Wall Street.’
Mr Belfort, who was played by Leonardo DiCaprio in the 2013 film adaptation, said ICOs could ‘blow up in so many people’s faces’, according to the Financial Times.
ICOs involve digital tokens or coins issued to investors by firms, often start-ups, which want to raise funds for their business or a specific project, bypassing banks and venture capitalists, in a similar way to crowdfunding.
The boom in ICOs has seen the value of popular cryptocurrencies rocket this year, with the best known Bitcoin rising from $998 on 1 January 2017 to $5,913 today.
The Financial Conduct Authority warned recently that ICOs were ‘high-risk’ investments since they come with no protection, their value is volatile and can often be linked to illegal schemes or fraud.
Investors are treating the tokens or coins as an investment in the firms issuing them, but are ploughing money into businesses they know little about.
In some cases ICOs ‘offer no discernable value at all’, the FCA said, warning they are ‘very-high, speculative investments’ for several reasons.
It added that investors should be prepared for the value of their tokens to drop to zero.
Meanwhile, JP Morgan Chase chief executive Jamie Dimon controversially claimed cryptocurrencies are ‘a fraud’ and only useful to drug dealers, murderers and people in countries such as North Korea and Venezuela.
Cryptocurrencies such as bitcoin and ethereum have exploded in value this year thanks largely to soaring popularity.
However, Mr Belfort said: ‘Everyone and their grandmother wants to jump in right now. I’m not saying there’s something wrong with the idea of cryptocurrencies, or even tulip bulbs. It’s the people who will then get involved and bastardise the idea.
‘It is the biggest scam ever, such a huge gigantic scam that’s going to blow up in so many people’s faces. It’s far worse than anything I was ever doing.’
Mr Belfort spent 22 months in prison after pleading guilty to money-laundering and securities fraud.
For the last decade, he has toured the world as a motivational speaker and recently released new book ‘Way of the Wolf.’
He says methods employed by ICO salesmen appeared similar to ‘pump and dump’ strategies used by boiler-rooms – obtain supply, aggressively promote, leak some into the market to stir interest, often with a celebrity, then flog the rest before a price collapse.
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