Skip to main content
Jordan Belfort: ICOs are the ‘Biggest Scam Ever’

Jordan Belfort: ICOs are the ‘Biggest Scam Ever’

in Bitcoin & Cryptocurrency published on 25, October 2017

The ‘Wolf of Wall Street’, Jordan Belfort, has become the latest high profile investor to weigh in on the debate around ICOs, labelling the practice the ‘biggest scam ever’.

The famous former financier, immortalized by Leonardo DiCaprio in the Hollywood film of the same name, became the latest critical voice around ICOs, which many consider to be a highly risky form of investment.

ICOs, or initial coin offerings, have raised well in excess of $2 billion this year, emerging as an alternative form of raising capital, via the blockchain, for the first time. Companies launch their own blockchain tokens for public sale, encouraging investors to buy up tokens in expectation of their future demand.

Like bitcoin and other cryptocurrencies, these tokens are derived from blockchain technology, and in most cases purport to offer some utility beyond their speculative value. However, according to regulators worldwide and an increasing number of industry commentators, the largely unregulated nature of ICOs means the risks could, for many, outweigh the rewards.

In reference to his own prior misdeed, Belfort told the financial press that some ICOs “were far worse than anything I was ever doing”, predicting that the model would “blow up in so many peoples’ faces.”

“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 five or 10 per cent are trying to scam you, it’s a disaster.”

Belfort has previously voiced support for the opinions of JP Morgan executive Jamie Dimon, who famously labelled bitcoin a ‘fraud’, anticipating that the currency will ultimately be taken over and controlled by financial regulators worldwide.

His latest comments go further on the issue of ICOs, which has become one of 2017’s main talking points for regulators tasked with examining the nascent blockchain and cryptocurrency space.

The US Securities and Exchange Commission is one regulator to have already taken action on the issue of ICOs, declaring that some in practice should be viewed as securities. This follows on from the instigation of several investigations into recent ICOs, with the SEC examining the details for signs of foul play.

While the ICO model is not intrinsically flawed and some good investments do exist, their concern for the minority of ICOs that may be intentionally operating under the regulator radar has driven regulators like the SEC to consider new models for regulation in future.

 

Like this article? Place your comments below