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."
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.