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Wolf of Wall Street: Cryptocurrency ICOs Are 'the Biggest Scam Ever' (betanews.com)
An anonymous reader shares an article: Jordan Belfort -- the real-life Wolf of Wall Street -- has warned that ICOs (or "token sales" or "coin sales") are "the biggest scam ever" and will "blow up in so many people's faces." The former stockbroker, who spent nearly two years in prison for fraud and financial scams, says that the Initial Coin Offerings used to raise money for cryptocurrencies are "far worse than anything I was ever doing." His fears seem to stem from the way ICOs differ from the more traditional IPO. With IPOs investors gain shares in whatever company they plough money into, and profits can be easily shared. With ICOs, however, there is no mechanism in place for distributing any profits that may be made, profits are reliant on the value of a given cryptocurrency increasing and, perhaps more worrying, ICOs are not regulated in the way IPOs are. Aside from the fact that some ICOs are out-and-out scams, many people believe that the cryptocurrency bubble is just that -- a currently growing bubble that will eventually pop, leading many people to lose out.
I love this guy!!!
...so it must be bad...
Easy come, easy go. I guess anyone foolish enough to dump a lot of money into these things deserves to lose it. I have zero sympathy, especially given the amount of warning these people have had. It's just the free market way of ensuring the gullible stay at the bottom of the pecking order.
You mean just like the American dollar?
Clearly statements made from ignorance, and also why is anyone listening to one of the biggest criminals in history?
Truth... to a point. This guy needs to study the mechanisms which allow profit to be divvied up amongst token holders, he's popping off before understanding the tech.
Seems like there are a very few worth currencies and the rest are Me-Too currencies that are only out there for pump and dump.
Really the only worthwhile currencies are those that you can use with a legit bank or a retail store. Anything else, buyer beware.
A crypto currency is a very convenient way to store and move money. Banks will charge 5% or more to convert your money from one currency to another and wire transfers are a pain and usually cost $10. Other money transfers often come with 1 or 2% fees and banks in some countries are corrupt and incompetent. Crypto currencies could replace a good portion of M2 since they work better than most traditional money. M2 world wide is equivalent to almost 30 Trillion USD. One day one crypto currency will likely approach this amount.
ICOs are a scam. They replace shares but are inferior in almost every way except they by-pass the traditional stock markets. (I suppose some conspiracy people might think this is a good idea). ICOs also don't allow high frequency trading since trades can only take place as fast as blocks are added to the block chain and buried to a sufficient depth to be trusted.
NASDAQ - a currently growing bubble that will eventually pop, leading many people to lose out.
Not all crypto currencies are created equal but common sense hints that most of them will certainly pop because obscurity will kill them: 1192 are far too many.
and everyone's trying to get onboard. Is this surprising to anyone that these are popping up in this current form after Bitcoins are soaring in value for some fucking reason?
I tend to rant.
I am all for free enterprise, even when it results in a collapsing bubble. But the thieves now embed the fraud within opaque derivative investments which have been fraudulently rated and sold by their friendly neighborhood bank.
Interesting, please explain how any profit comes other than by increasing value of the currency?
Bitcoin - high latency and transaction costs, organizationally dysfunctional*, most recognized and most accepted. If you are sending money or live in a country with unreliable banks use this.
Monero - if you are donating to Wikileaks (or doing something else you don't want the government seeing) use this and only use sites that exclusively use it.
Etherium - low transaction costs, fairly good acceptance, most convenient for day to day banking
Vertcoin - features, speed and a good development community, likely the next currency I will support
Proof of stake currencies???
One day a crypto coin will replace a good chunk of M2 (currently 30 Trillion USD). It won't be bitcoin, it may not be a coin that exists today.
Disclaimer - At any given time I may hold some or all of the above currencies.
*I'm not saying Bitcoin supporters or devs are dysfunctional. I'm saying the process that is required to add a new feature is dysfunctional.
Look, if this fella had bought several Bitcoin at $117 or better, he'd be singing a different tune, the opposite of what he's talking about I guarantee.
He's 100% correct.
ICOs and their older siblings "premines" are a true mark of bullshit. When the Ethereum bubble pops, almost every single altcoin (i.e., all cryptocurrencies other than Bitcoin) will crash and burn overnight. In the Bitcoin world, currencies with a significant premine were universally known as scam coins. In essence, the creators of the currency decided to print themselves tons of free currency before opening the doors to the public. ICOs are a similar deal. It's like buying stock in a company that doesn't exist. Most commonly, they're an extension of Ethereum and are a mountain of nothing, pegged to nothing, and sold for real money or Ethereum (which is quickly sold for real money).
Setting up your own ICO for some token running in Ethereum (along with a shitty site that does nothing but let you send those tokens to other idiots in the ICO) is a turnkey operation, which is why they're so prevalent.
if one does manage to select one of the few ICO's which eventually creates profit ( clearly the majority are exactly the BS he describes ), there are mechanisms to allow holders of such tokens to retrieve their share of the profits.. one of the reasons for crypto-craziness. read up on ERC20 tokens and note that whenever a viable enterprise arises which employs such tech... things are going to change. "...knowing about investing..." will certainly help a person wishing to invest, but understanding the coming automation of this stuff will prove helpful.
If I start a company to manufacture feces-flavored air fresheners and do an IPO, it's not a scam, it's just a bad idea. People are responsible for a bit of critical thought when they invest their money. ICOs and cryptocurrency in general are going to be shot down, and they'll all be outlawed eventually, but for now ICO #3477 is just a bad idea, not a scam, unless of course there's no actual software/tracking/blockchain/currency/etc. THEN it would be a scam.
All these years of super low interests rates and the Fed printing money has led to an asset bubble in many sectors. The stock market is trading at all time highs for no rational reason. And some stocks are flying so high and the underlying business never made any money - ever.
Folks are chasing returns and taking on so much risk - gambling - to get some sort of decent returns, that it's 1999 all over again.
People never learn. The writing is literally there (like financial statements) but people are clinging to hope and faith in big talkers who have yet to make any money but offer only lame excuses that stupid people believe.
People are gonna lose their asses -AGAIN - and they'll be turned off to the markets -AGAIN - and in a couple of years, it'll start all over AGAIN.
No wonder Thaler won the Economics prize.
In the 1990s, eBay showed us the fundamental rule of economics: Everything is worth what two people are willing to pay for it.
Caveat emptor (let the buyer beware).
Bitcoin is bigger than Jesus?
Sure, ICOs are scams, but they aren't any worse than an established company that doesn't pay dividends on their stock.
I've heard the arguments for Bitcoin and against. In theory, Bitcoin has no controls on it and is suppose to be allow you to make anonymous transactions. Which is curious because our normal physical currency was essentially like that at some point too but as society grew up it became more regulated and stable to try to help people. Then when that illusion blew up multiple times due to scams, fraud and use for mostly illegal activities, the other massive argument was there was a lot of money to be made. Usually in life if there's a lot of money to be made there's a lot to be lost as well. Money isn't magic, there needs to be some give and take. My opinion is if you want to gamble your assets on Bitcoin, go for it but realize at the same time that it could just as easily blow up in your face and when it does there's no one to provide any sense of a safety net because that's what you're going for. I won't touch it for that reason but there are many that will.
./ has always been at the forefront of new technologies, and now crypto currencies get all the flak from the ./ crowd. Weird. And Bitcoin has been here since ... 2009, so for over 8 years already and it shows no signs of slowing down or dying.
It's kinda sad to see ./ falling victim to almost daily assaults on Bitcoins validity and future. I guess many people here are upset that they didn't invest in Bitcoin when it was sold for pennies and they hate it. I didn't buy it when it cost that little back then but I'm pretty calm about it and I won't shout at the top of my lungs that it's a bubble or a Ponzi scheme. It has its place in this world and it has proven its utility.
Do a line of best fit of the last 20-years of S&P 500 and try to argue that current values are out of line. The very fact that interest rates are low is meant to spur growth because money can be borrowed cheaply.
That money should be sunk into R&D. Chasing tulips may be popular, but for long term gains, being being able to be steps ahead in research, even if it is stuff that sits on a shelf for decades, will ensure things go well in the long term, regardless of the fickleness of the market.
I got a message on social media from a long time friend. We've been friends since elementary school. He's an educated man but somehow, someone got their hooks into him with regards to some new crypto coin offering. He was trying to convince me to go all in on it with him. I'm sure that he believes in this. I hope I'm wrong about it but the whole deal doesn't smell right.
The website he directed me to visit for more information consisted of a hosted blog page that was exceptionally light on details of the crypto, the infrastructure and the people behind it.
Crypto coins seem to be becoming the MLM of the next decade.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
Usually the MORE the number prominent and influential people you see calling something a bubble; the less-likely it is to be a bubble, or the more likely it is to be limited in size or impact. All the major bubbles that wound up exploding and being serious calamities were NOT widely being called bubbles until after the pop, at least not by popular figures --- For example, the housing bubble and calamotous crash that nobody really predicted, although many people later made non-credible claims of having guessed: you can tell they didn't predict it because they didn't financially bet on it imploding.
Popular figures calling things bubbles causes investors and potential investors to become more apprehensive and cautious..... that's probably the case with some ICOs. I agree that many other ICOs are likely to be scams, but that doesn't necessarily mean the whole system is a bubble.
Do a line of best fit of the last 20-years of S&P 500 and try to argue that current values are out of line.
Doing a regression analysis on stock market prices? Good luck with that.
The very fact that interest rates are low is meant to spur growth because money can be borrowed cheaply.
So, an alumnus of Ithaca Community college are we?
It doesn't sound like the author means "bubble" in any technical sense, merely that he believes the the value will decline over time. Prices tend to move with what people believe about the future price of things relative to what others believe. IMHO, it is worth distinguishing between "bubbles" and high risk investment. With no special legal protection for one group, or bizarre barriers to market, this is merely a wild new idea that may or may not pan out in the market.
There is also no special knowledge at play here. People can judge the contracts for themselves.
Gold does have innate value. It is a rare metal with many desirable qualities. An excellent conductor, does not oxidize. Satellites use a bunch of it. That computer your using to put in the above comment uses a trivial amount of it. Certain other electronics use it. We could also be talking about platinum or palladium or any number of other rare metals. Even the copper penny ain't so much copper any more because the value of the penny melted down (assuming pure copper) is worth more than than a penny. Silver also is now not used in coinage because the innate value exceeds the value of the coin.
....all over again.........fixing up a bowl of popcorn.
Clearly statements made from ignorance, and also why is anyone listening to one of the biggest criminals in history?
At my previous place of employment my (paper) cheques were made by that guy's company who knew a thing or two about cheque counterfeiting...
Just saying, and great movie (and book) too!
Paul B.
they mean value besides the currency. Gold has 'innate' value because gold is in and of itself valuable. Yes, that's probably not the strict definition of 'innate' but it's understood to be what people mean.
Air isn't valuable in that fashion not because it lacks value because it's too common. If gold were as common as dirt it would lose much of it's innate value.
The value of a currency is determined not by what people pay for it per se but what you can buy with it. The 'Big Mac Index' comes to mind here. We moved to fiat currencies because our economy out grew the gold standard. We had more economic activity than we had gold to back it. It was holding us back.
The price of bitcoin is largely based on what you can buy with it. It just so happens what you buy is kinda shady. Drugs, ransomware payments, money laundering, gambling, etc are driving up bitcoin's value. This works because those things have very little cost but a high value because they're illegal. This is true for all the big crypto currencies.
Basically, the price of bitcoin will drop when the thing underpinning it drops. Just like Zimbabwe saw hyper inflation when their country went to hell you'll get the same thing with bitcoin (but in reverse since you can't just print more). The underpinning is basically crime. Eventually the government will crack down and that'll be that. Or worse they'll legalize drugs and gambling. Either way bitcoin's days are numbered.
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The former stockbroker, who spent nearly two years in prison for fraud and financial scams
That's the problem! Two years? Viatnam knows what to do with corrupt bankers and brokers.
Yes, and Amway isn't a scam, because it's a legal business entity.
which is probably the actual point.
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What's truly sick is that this shithead continues to profit off of the misery that he caused an untold number of poor and working class folks hoping to make better lives for themselves. The fine that he has to pay is merely peanuts when compared with the sums of money he stole.
pump and dump is fine as long as you buy before the pump and sell before the dump but most of these ico's seem to dump as soon as they hit the broader market so I tend to stay away as a principle. You do miss out a little. I could have bought etheruem in the ico but I thought it was a scam because ico
Some of the ICO offering are a bubble. Which ones? What proportion? All???? Are you sure?
Nobody should invest anything in an ICO that they can't afford to lose. Everyone should realize it's a gamble with no insurance. This doesn't mean it's a bad bet, you need to estimate the probabilities and your risk tolerance. And realize that it's an estimate.
P.S.: This comment about estimating risk definitely applies to bitcoins. I consider them riskier than a stock index fund, but I couldn't quantify how much riskier, and they've got a large potential payoff. But at some point they'll crash.
That said, at one point the Senate of Rome printed some "paper money". (Well, OK, officially issued counterfeit money.) Soon afterwards it lost most of it's value, but today if you could find any it would be worth quite a lot. So would an authentic blue triangle stamp. And the number of plausibly generated bitcoins is limited. That they're currently being mined using "other peoples computers/electricity" may indicate that we've passed a point of inflection.
I think we've pushed this "anyone can grow up to be president" thing too far.
Sure, they can work if they stay reasonably stable, because there actually is real work necessary to produce more "coins" and they can be used for other purposes than speculation. But as soon as the value fluctuates wildly (as Bitcoin does at the moment), they become unusable for anything except speculation and then they turn into a game of chicken and will eventually crash, just like a pyramid-scheme does.
The main reason to back a currency (or stocks) with something solid is to prevent wild fluctuations and to make it something that can be used to store value and to exchange in trade.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
The biggest scam bubble is yet to explode, its 100 billion worth and it's called BITCOIN !!
of the economy by talking your way through it; even without the backing of a course in economics. Those sorts of discussions are the bedrock of a democracy. To your point, it would be nice if folks were better educated. But it's tough to get people (read: voters) willing to pay for it. We've been cutting education for 30 years straight. There are consequences for that.
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because it's attractive without staining your skin when you wear it. The attractiveness of it helps you attract valuable mates and contacts to network with. Being attractive is a valuable resource. If you can't do it with natural good looks you do it with cloths and jewelry.
I'm going to go off on a tangent here, so feel free to stop reading. Gold won't be worthless unless we devolve to the point where we can't support a ruling elite who trades in beauty and influence. And that scenario is more a fantasy than anything else in your post. I suspect a number of people would like to see that world because, well, as nerds we like to think it would be an equalizer.
I remember a zombie anime (japanese cartoon if any older nerds are reading) where a nerdy survival nut was getting lots of attention from girls because he could shoot. That's the kind of fantasy I see bitcoin obsessives indulging in. It's not helping. You want a better real world for yourselves. And that starts with things like single payer healthcare, high minimum wages, college for everybody, an end to our eternal wars and real public works projects. The sorts of things that build a society where nerds like us get the support we need to no longer be the kind of nerds we don't want to be.
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Requiem for the American Dream
Of course they'll trash it. Cryptocurrency totally undermines the giant legalized scam they've been perpetrating for like 120 years.
I just tell them they are literally buying an actual ponzi scheme, yours is much better :)
I listened back in 2009 when all you guys told me Bitcoin was pointless. A couple of years later I thought for myself and got hold of a few...which are now worth 20X that amount...oh and any initial 'fiat' investment has since been taken out and I still have thousands of $$$ worth! So to all the naysayers - I have bitcoin, it didn't cost me anything and I'm happy.
You said "You can exchange Bitcoin for pizza or for hotel bookings."
Would be very interested to know what hotels, say in Brooklyn, take BTC. And are as easy to book as with my credit card.
I sniff that you're a fanboy.
The whole point of inflation is not to make people _spend_, but to make people _work_. Fixed that for you.
This is entirely based on the bigger fool method. I can make money as long as I find a bigger fool to sell it to.
Sooner or later you run out of fools.
what a dick head... yes some coins are junk, but not all of them. this guy is a dinosaur who snorted to much coke.. ignore him.