Jordan Belfort, the man who was immortalised in the Hollywood movie The Wolf of Wall Street starring Leonardo Di Caprio, has said the new trend for initial coin offerings is “the biggest scam ever”.
In an interview with the Financial Times, Jordan Belfort said that ICOs are “far worse than anything I was ever doing”.
Typically ICOs involve a start up company offering cryptographic tokens in exchange for cryptocurrency such as Bitcoin or Ether. This form of fundraising acts as an alternative to selling shares or raising debt. The cryptographic tokens can then be traded individually or exchanged for services from the company selling them.
However, many leading financial institutions and governments have been warned about using ICOs to raise funds citing a lack of regulation and security, in addition to them leading to speculative activity.
Some investors have lost millions in hacked or fake ICOs.
Speaking to the Financial Times, Jordan 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.”
He went on to say those promoting ICOs “are perpetuating a massive scam of the highest order on everyone.”
“Probably 85pc 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 f****** disaster,” he added.
In 2003, Jordan Belfort was sentenced to prison and served 22 months after he admitted money laundering and securities fraud.
The new comes after the cryptocurrency Bitcoin broke through the $6,000 mark for the first time on Friday before trading at an all time high of $6,200 over the weekend.