Jordan Belfort, the infamous trader who ran a now-defunct Long Island brokerage and pleaded guilty to stock manipulation, continued to bash bitcoin and the larger cryptocurrency space in a recent CNBC documentary.
Belfort, "The Wolf of Wall Street," who was the inspiration for the hit movie of the same name, is confident that bitcoin, the largest digital coin by market capitalization, is the next trap in which retail investors risk losing all of their money. (See also: Bitcoin Will Become World’s ‘Single Currency’: Dorsey.)
Belfort was a former penny-stock broker who spent nearly two years in prison for deceiving investors. In 1999, he pleaded guilty to manipulating people into buying stocks that turned out to be worthless. He was depicted by Leonardo DiCaprio in Martin Scorsese's 2013 film.
Former Scammer Predicts Bitcoin to Crash Within the Year
"I was a scammer. I had it down to science, and it's exactly what's happening with bitcoin," Belfort told CNBC. "The whole thing is so stupid, these kids have gotten themselves so brainwashed." Belfort explained that in order to manipulate markets, scammers need to form a demand. In Belfort's case, he hired an entire team of people to call around the world attempting to persuade small investors to buy stocks that he would later "dump" and cash in on.
In the internet age, creating demand has become easier for those seeking to take advantage of investors. Many critical of the cryptocurrency space have pointed to a high degree of fraud in the initial coin offering (IPO) market, in which startups promise coins in return for funding, instead of a stock offering. Many ICOs have raised money for projects that fail to bear fruit and cause investors to lose their money. As a result, the Securities and Exchange Commission (SEC) has doubled down on its ICO investigations, while social platforms like Facebook Inc. (FB) and Twitter Inc. (TWTR) have outlawed the advertising of ICOs altogether.
"This thing is going to evaporate like a mirage," said Belfort. "There's a lot of really honest people who are going to get slaughtered." He expects the big bitcoin bubble to burst within the year. (See also: Bitcoin May Fall By a Third in 2018: Study.)