‘Wolf of Wall Street’ warns ICOs are ‘biggest scam ever’

in bitcoin •  2 years ago 

AN HOUR AGO by Ben McLannahan in New York
Jordan Belfort, the former penny-stock broker immortalised in the film, The Wolf of Wall Street, has dismissed the current craze for initial coin offerings as “the biggest scam ever” that is bound to “blow up in . . . people’s faces”.

The warning comes after ICOs — which raise funds online by selling investors digital tokens in exchange for cryptocurrencies such as bitcoin and ethereum — have soared in popularity. So far this year, 202 ICOs have raised just over $3bn, according to Coinschedule.com, mostly for ventures promising to improve the experience of trading and investing in digital currencies.

But the market has drawn scrutiny from regulators, which are worried that small investors are being duped by promises of outsized returns. Last month China’s central bank banned ICO funding, saying it had “seriously disrupted the economic and financial order” while UK regulators have said that investors should be prepared for the value of their tokens to drop to zero.

Mr Belfort, who spent 22 months in prison after pleading guilty to securities fraud and money-laundering, drew parallels to the fashion for “blind pools” in the 1970s and 80s, when companies raised funds from investors without specifying how the money would be spent. Many pools were dissolved without making a single investment — but not before brokers made off with big fees.

“Promoters [of ICOs] are perpetuating a massive scam of the highest order on everyone,” he said. “Probably 85 per cent of people out there don’t have bad intentions, but the problem is, if five or 10 per cent are trying to scam you, it’s a f**king disaster.”

“Everyone and their grandmother wants to jump in right now,” he said. “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.”

Since being freed from jail in 2005 Mr Belfort, 55, has carved out a career as an author and motivational speaker. He is due to appear in New York this week at an event hosted by Synergy Global Forum, at which he’ll promote his new book, Way of the Wolf.

Meantime, Mr Belfort is advising friends and family to steer well clear of ICOs.

“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,” he said.

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