The former con artist is calling initial coin offerings 'the biggest scam ever'
It takes a thief to catch a thief, they say. So when the Wolf of Wall Street says something looks suspicious, investors may want to listen.
As interest in bitcoin and other cryptocurrencies continues to explode, initial cryptocurrency offerings (ICOs) have surged in popularity. But Jordan Belfort, the notorious former penny-stock broker whose life inspired the film The Wolf of Wall Street, is referring to ICOs as the “biggest scam ever,” reported the Financial Times.
Citing figures from Coinschedule.com, the report said that just over US$3 billion has been raised through 202 ICOs so far this year. Most of the offerings, which raise funds by giving investors digital tokens in exchange for cryptocurrencies such as bitcoin and ethereum, were from ventures that promised a better experience of trading and investing in digital currencies.
This has raised concerns among regulators, which believe that small investors are being targeted with promises of outsized returns. ICOs were banned in China last month, while UK regulators have said investors should be prepared for the possibility that their tokens’ value will be totally erased.
Weighing in on the subject, Belfort said that the current craze is reminiscent of the popularity of “blind pools” in the 1970s and ‘80s. Under such offerings, companies managed to amass funds without telling investors how the money would be used. Brokers were able to collect huge fees by pushing such pools, many of which were terminated before they made a single investment.
“Promoters [of ICOs] are perpetuating a massive scam of the highest order on everyone,” he said. “Probably 85% of people out there don’t have bad intentions, but the problem is, if five or 10% are trying to scam you, it’s a f**king disaster.”
Proponents of ICOs have said that they let start-ups legitimately bypass big banks and venture funds. Token-holders are typically entitled to avail of a certain product or service after it’s launched; others have a right to a piece of future profits.
Still, Belmont remained unconvinced. He noted apparent similarities between the techniques used by people peddling ICOs and “pump and dump” schemes used in boiler-room operations.
“I’m not saying there’s something wrong with the idea of cryptocurrencies,” he said. “It’s the people who will then get involved and bastardise the idea.”
For more of Wealth Professional's latest industry news, click here.
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Big Six bank has issues with Bitcoin
Regulator supports firms’ cryptocurrency plans
As interest in bitcoin and other cryptocurrencies continues to explode, initial cryptocurrency offerings (ICOs) have surged in popularity. But Jordan Belfort, the notorious former penny-stock broker whose life inspired the film The Wolf of Wall Street, is referring to ICOs as the “biggest scam ever,” reported the Financial Times.
Citing figures from Coinschedule.com, the report said that just over US$3 billion has been raised through 202 ICOs so far this year. Most of the offerings, which raise funds by giving investors digital tokens in exchange for cryptocurrencies such as bitcoin and ethereum, were from ventures that promised a better experience of trading and investing in digital currencies.
This has raised concerns among regulators, which believe that small investors are being targeted with promises of outsized returns. ICOs were banned in China last month, while UK regulators have said investors should be prepared for the possibility that their tokens’ value will be totally erased.
Weighing in on the subject, Belfort said that the current craze is reminiscent of the popularity of “blind pools” in the 1970s and ‘80s. Under such offerings, companies managed to amass funds without telling investors how the money would be used. Brokers were able to collect huge fees by pushing such pools, many of which were terminated before they made a single investment.
“Promoters [of ICOs] are perpetuating a massive scam of the highest order on everyone,” he said. “Probably 85% of people out there don’t have bad intentions, but the problem is, if five or 10% are trying to scam you, it’s a f**king disaster.”
Proponents of ICOs have said that they let start-ups legitimately bypass big banks and venture funds. Token-holders are typically entitled to avail of a certain product or service after it’s launched; others have a right to a piece of future profits.
Still, Belmont remained unconvinced. He noted apparent similarities between the techniques used by people peddling ICOs and “pump and dump” schemes used in boiler-room operations.
“I’m not saying there’s something wrong with the idea of cryptocurrencies,” he said. “It’s the people who will then get involved and bastardise the idea.”
For more of Wealth Professional's latest industry news, click here.
Related stories:
Big Six bank has issues with Bitcoin
Regulator supports firms’ cryptocurrency plans
