Jodran Belfort says that bitcoin and other cryptocurrencies are part of an unregulated dark market that is going to crash.
Jordan Belfort, the real “Wolf of Wall Street,” is once again warning against buying into bitcoin. In an interview last week with CNN Money, the former stockbroker says that bitcoin is essentially a scam.
“There’s no regulation on the actual level of bitcoin itself,” he tells CNN’s Richard Quest. “Yeah there’s futures regulation but the underlying asset is completely unregulated. It’s a dark market.”
The former stockbroker is the inspiration for the Martin Scorsese movie titled, “The Wolf of Wall Street.” Belfort spent 22 months in jail after pleading guilty to securities fraud and money laundering in 1999. He wrote a memoir about his experiences, which was then adapted into the 2013 film.
These comments about bitcoin mirror his recent statements to The Financial Times. In October, Belfort warned that promoters of ICOs were “perpetuating a massive scam of the highest order on everyone.”
Belfort explains that there are people who are now using the success of bitcoin to create “massive pump and dumps” with other cryptocurrencies.
“I think it’s a huge danger right now that people are looking at this as the next great thing,” he tells CNN Money. “It’s a bubble for sure.”
Going forward, Belfort says you will likely see bitcoin and other cryptocurrencies skyrocket. Eventually, he warns, it’s going to come caving in: “It’s almost a guarantee.”
Belfort joins a growing list of financial experts and investors who warn against joining the bitcoin craze. Though bitcoin surpassed $19,000 for the first time this month, CNBC’s Jim Cramer calls it a pure gamble .
“I’m not denying the crypto world, I’m supporting the crypto world. I think that crypto is great,” Cramer said on “ Squawk Box .” “But I think we have to be a little more careful.”
Billionaire Mark Cuban backs that theory . Cuban tells Vanity Fair that it’s perfectly okay to invest up to 10 percent of your savings in high-risk investments like bitcoin. However, you’ve just “got to pretend you’ve already lost your money,” he says. In a nutshell: Only invest in bitcoin if you’re prepared to lose money.
The best way to invest your money right now, says Cuban , is to go with a cheap S&P 500 fund.
Berkshire Hathaway CEO Warren Buffett has also remained a longtime bitcoin skeptic. Though the billionaire investor hasn’t said much about the cryptocurrency recently, he called it a “mirage” on CNBC in 2014 and advised people to “stay away from it.”
Belfort tells CNN Money that although bitcoin is skyrocketing now it will reverse itself at some point.
He points to the mortgage market as a prime example of people taking something that was “crap,” subpar mortgages, ramping it up by telling people how great it is and then having the value take a major tumble.
This is the bottom line, he says: “The sentiment will change and [bitcoin] is going to drop so hard and fast.”
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