Original 'Wolf of Wall Street' terms ICOs as 'the biggest scam ever'

Jordan Belfort, the financier convicted of fraud and the author of the book "The Wolf of Wall Street", arrives for the premiere of the film adaptation of his book in New York December 17, 2013. REUTERS/Lucas Jackson (UNITED STATES - Tags: ENTERTAINMENT BUSINESS) - GM1E9CI0O4401

The shrewd stockbroker who was immortalised in the Leonardo DiCaprio-starrer The Wolf of Wall Street has termed the initial coin offerings as “the biggest scam ever”.

Jordan Belfort, who spent 22 months in prison for fraud and running scams which duped investors around USD 200 million, said to Financial Times that ICOs or initial coin offerings, the fundraising methods linked to cryptocurrencies like Bitcoin, are “far worse than anything I was ever doing.”

Companies coming with ICOs issue cryptographic tokens, usually in exchange for cryptocurrencies like Bitcoin or Ether. These tokens are an alternative to selling shares or raising debt. They can be traded or exchanged the same way a share is traded. One can also get it exchanged for services from the company itself.

According to a CB Insights report, over USD 2 billion has been raised in ICOs in the first nine months of 2017, an increase of 3,704 percent from the previous year. The Bitcoin has also seen an unprecedented growth that has seen its single unit's price rise from USD 1,000 to USD 6,000.

"It's the biggest scam ever, such a huge, gigantic scam that's going to blow up in so many people's faces," Belfort said. "It's far worse than anything I was ever doing."

He said that maybe 85 percent of the people promoting ICOs have good intentions but the real problem is if remaining 5 to 10 percent try to scam you, “it’s a f*****g disaster.”

Incidentally, China's central bank had banned the funding of ICOs last month saying it had “seriously disrupted the economic and financial order”. Whereas, European regulators have warned the investors that they should be prepared for a scenario when the value of the token drops to zero.

The former penny stockbroker is now a motivational speaker and an author and has earned millions after coming out of prison.