Guy Who Ran Really, Really Huge Scam Warns ICOs Are the "Biggest Scam Ever"

By Tom McKay on at

A hustler knows a hustle. So if you have ever considered sinking money into an initial coin offering—a complicated, barely regulated, and booming new form of financial vehicle where startups offer investors stakes in “new” cryptocurrencies rather than traditional stock—it might be a good idea to listen to what one of finance’s most notorious criminals-turned-authors has to say.

Jordan Belfort, the so-called “Wolf of Wall Street” behind the 1990s-era Stratton Oakmont pump-and-dump scheme that authorities estimated bilked investors of at least £150 million, told the Financial Times in a recent interview that people should have been a bit more cautious before pumping sketchy ICOs full of billions of pounds throughout 2017.

Because really, people, we apparently do need to have a convicted scammer who once allegedly parked a helicopter on his lawn while stoned out of his mind tell you how these things work.

“Promoters are perpetuating a massive scam of the highest order on everyone,” Belfort told the paper. “Probably 85 per cent 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 fucking disaster.”

Comparing the situation to “tulip bulbs”—referring to the famous period of Dutch history in which tulip prices shot sky-high and then crashed to near nothing—Belfort added, “It is the biggest scam ever, such a huge gigantic scam that’s going to blow up in so many people’s faces.”

The Securities and Exchange Commission has been warning for months that ICOs, which are largely unregulated, could easily function as thinly veiled fronts for scammers promising huge returns on fraudulent, crypto-backed investments. In September, the SEC charged one ICO operator, Maksim Zaslavskiy, with fraud in relation to a real estate firm and diamond club which had no real operations. It’s possible the agency is mulling a larger crackdown predicated on possible violations of security laws.

None of that is even considering that cryptocurrency markets are notoriously chaotic and volatile, and even your legitimate investment could collapse overnight.

But, if you weren’t going to listen to the SEC about ICOs, or grow concerned that some countries are banning ICOs, please do listen to the actual scammer telling you what a freakin’ easy mark you people are. Or, you know, don’t! Maybe the bubble really will grow forever. [Financial Times]

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