It takes a scammer to know a scam and Jordan Belfort, former stockbroker turned motivational speaker whose life was famously depicted in the 2013 film “Wolf of Wall Street,” warns investors to be leery of Bitcoin.
Belfort is all too familiar with investment hype machines after he defrauded investors via his stock brokerage Stratton Oakmont, which functioned as a boiler room to pitch penny stocks as part of a “pump and dump” scheme. In 1996, the National Association of Securities Dealers expelled Stratton Oakmont and Belfort was indicted of securities fraud as well as money laundering in 1999.
After serving a prison sentence, Belfort has penned two books and serves as a motivational speaker for topics, such as sales skills and entrepreneurship.
“I was a scammer. I had it down to science, and it’s exactly what’s happening with bitcoin,” Belfort told CNBC in a documentary. “The whole thing is so stupid, these kids have gotten themselves so brainwashed.”
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The price of Bitcoin reached a high of $20,000 in late December of last year, but has since lost over 60% of its value as digital currencies continue to face concerns regarding manipulation and security. Despite efforts by various firms to bring Bitcoin and other cryptocurrencies under regulatory control, Belfort doesn’t foresee a future for digital currencies.
“This thing is going to evaporate like a mirage,” Belfort said. “There’s a lot of really honest people who are going to get slaughtered.”
Bitcoin ETFs Still Facing Obstacles
In the meantime, Bitcoin ETFs continue to face a legal labyrinth to legitimacy in the investment space and despite efforts by firms, they keep encountering their own Minotaur in the form of the Securities and Exchange Commission. Nine Bitcoin-based exchange-traded fund (ETF) applications got the seemingly perfunctory rejections on Wednesday, preventing cryptos from gaining more acceptance from investors who are wary of the unregulated exchanges of cryptocurrencies.
Brian Kelly, founder and CEO of BKCM LLC, an investment firm focused on digital currencies, is optimistic that a Bitcoin ETF will finally slay the Minotaur and make its way into the investing world, but it will take time and must address certain issues:
- February 2019 is likely earliest for an ETF–the US Securities and Exchange Commission postponed their decision on a bitcoin ETF until late September, but Kelly foresees the decision getting pushed back further to February.
- SEC needs surveillance ability–how will the SEC monitor instances of fraud rather than prevent it
- Futures market is not mature enough
In an attempt to fall under the governmental regulation of the SEC, the cryptocurrency industry has been unable to bring this into fruition, starting with the Winklevoss Capital Management founders Cameron and Tyler Winklevoss application, which was rejected twice.
For more information on the cryptocurrency market, visit the Bitcoin category.