Jordan Belfort, the infamous penny-stock broker formerly known as the “Wolf of Wall Street,” has urged investors to dismiss the current craze of Initial Coin Offerings (ICOs), calling them the “biggest scam ever”.
In an interview with The Financial Times published Sunday, Belfort warned promoters of ICOs were “perpetuating a massive scam of the highest order on everyone.”
In his statement “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,” Jordan Belfort told the Financial Times in an interview published Sunday.So far this year, ICOs have raised more than $3 billion, according to Coinschedule.com.
ICOs have become a primary means of fundraising for projects built on blockchain technology. Companies create and issue digital tokens that can be used to pay for goods and services on their platform or stashed away as an investment. But investors don’t typically get equity stakes in a company like they do with an initial public offering (IPO). The projects or firms put out white papers describing the platform, software or product they’re trying to build, and then people buy those tokens using widely-accepted cryptocurrencies (like bitcoin and ethereum) or fiat currencies like the U.S. dollar.
All of that is done without any regulatory oversight, and both regulators and members of the financial industry have expressed concern about the potential for money laundering and fraudulent activities.
In September, China’s central bank banned ICO funding amid concerns that the exercise may involve financial scams while British regulators have said investors should be prepared for the value of their tokens to drop to zero.
The Saudi billionaire investor Prince Alwaleed bin Talal said Monday in a statement that bitcoin will “implode” one day. “It just doesn’t make sense. This thing is not regulated, it’s not under control, it’s not under the supervision” of any central bank, Alwaleed said in an interview on CNBC. He also made reference to the massive accounting fraud that took Enron, a U.S. energy-trading and utilities giant, into bankruptcy in late 2001.
Prince Alwaleed runs Kingdom Holding, a massive conglomerate whose investments include Citigroup, Apple and Twitter. The company is based in Riyadh, Saudi Arabia.