Wolf of Wall Street: cryptocurrency ICOs are 'the biggest scam ever'
Jordan Belfort -- the real-life Wolf of Wall Street -- has warned that ICOs (or "token sales" or "coin sales") are "the biggest scam ever" and will "blow up in so many people's faces."
The former stockbroker, who spent nearly two years in prison for fraud and financial scams, says that the Initial Coin Offerings used to raise money for cryptocurrencies are "far worse than anything I was ever doing." His fears seem to stem from the way ICOs differ from the more traditional IPO.
With IPOs investors gain shares in whatever company they plough money into, and profits can be easily shared. With ICOs, however, there is no mechanism in place for distributing any profits that may be made, profits are reliant on the value of a given cryptocurrency increasing and, perhaps more worrying, ICOs are not regulated in the way IPOs are.
Aside from the fact that some ICOs are out-and-out scams, many people believe that the cryptocurrency bubble is just that -- a currently growing bubble that will eventually pop, leading many people to lose out.
Speaking to the Financial Times, Belfort said:
It's 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.
Promoters are perpetuating a massive scam of the highest order on everyone. Probably 85 percent of people out there don't have bad intentions but the problem is, if 5 or 10pc are trying to scam you it's a fucking disaster.
Belfort is far from being the first person to warn against the dangers of investing in cryptocurrencies, and China has gone as far as banning ICOs.