The Wolf of Wall Street says ICOs will 'blow up in people's faces'

Jordan Belfort, the financier convicted of fraud and the author of the book

REUTERS/Lucas Jackson

• Jordan Belfort inspired the film 'Wolf of Wall Street' after running stock selling boiler room.

• Belfort says initial coin offerings (ICOs) are 'far worse than anything I was ever doing.'

• Over $2 billion raised through the controversial fundraising method so far this year.

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LONDON – The former banker who inspired the film the "Wolf of Wall Street" claims that the current craze for selling digital coins online is the "biggest scam ever."

Jordan Belfort told the Financial Times in an interview that "initial coin offerings" are "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."

Belfort served 22 months in prison for securities fraud and money laundering after running a "pump and dump" stock selling boiler room that illegally sold penny stocks to investors. He turned his story into a book while in jail that was developed into the "Wolf of Wall Street" film, in which Leonardo DiCaprio plays Belfort.

"Initial coin offerings", or ICOs, are a new form of online fundraising, where startups issue digital coins or tokens in exchange for real money that can be used to fund their project. These tokens can then be used in some way within the startup's finished product. The hope is that the startup's become a success and the tokens increase in value as people use the service.

ICOs have become hugely popular this year, with over $2 billion raised using the method in 2017 so far. However, regulators in China and South Korea have banned them and the UK regulator has warned investors that ICOs are "very high risk."

Belfort told the Financial Times: "Probably 85% of people out there don’t have bad intentions, but the problem is, if 5 or 10% are trying to scam you, it’s a f**king disaster."

You can read the full FT piece here.

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