Bitcoin is the biggest scam in history
Are cryptocurrencies "the greatest scam of all time"?
Jordan Belfort's scandalous life provided the template for the film "Wolf of Wall Street". Now he warns against putting money in digital currencies. The projects are often from Switzerland.
Jordan Belfort knows how to make money doing dirty business. The US citizen was imprisoned for 22 months for securities fraud and money laundering. Now he is warning of the next big scam: new digital currencies. It is "the greatest fraud of all time", says Belfort of the "Financial Times" (paid article). The thing could end in a big bang, warns the Wolf of Wall Street.
He is not directly concerned with the digital currency Bitcoin, which is constantly climbing new highs, but with the numerous other new projects on the subject of cryptocurrencies that have recently emerged. This year 202 so-called Initial Coin Offerings took place worldwide. This means projects that have to do with crypto currencies and were mostly financed by the currency Bitcoin.
3 billion were invested in 2017
According to the Coinschedule web portal, all of the new launches have a total market volume of more than 3 billion dollars. 85 percent of the promoters would have no bad intentions, but if only 5 to 10 percent want to pull off a fraud, it would be a disaster, Belfort told the FT. The techniques of the crypto startups remind him of his time on Wall Street, when people tried to use unclean methods to drive up the value of their own shares as much as possible and then sold them before the market collapsed.
Some of the top-rated new projects related to cryptocurrencies come from Switzerland. Because the country has developed into a sought-after location for young companies dealing with new financial technologies. The new digital currency projects Tezos, Bancor and Status, for example, are related to Switzerland. According to the Coinschedule portal, the three projects are among the most successful new launches of the year. Tezos managed to collect the most money from investors. Around 230 million francs have been invested in the new currency, which is due to start in 2018.
Dispute over Swiss flagship project
But a few weeks after the successful fundraising campaign, a violent dispute broke out between the founders. The company behind Tezos is located in the USA, but the foundation set up for the launch is in Zug. The US couple Arthur and Kathleen Breitman run the company and are now trying to gain control of the Swiss foundation. This is chaired by the Canadian entrepreneur Johann Gevers, who works in Switzerland. The Breitmans and Gevers are now accusing each other of targeting the money and obstructing the Tezos project. How the dispute ends is open.
The many new Swiss projects in the field of cryptocurrencies have also called the local authorities to the scene. The financial market regulator Finma recently announced that it wants to take a closer look at the new digital currencies from Switzerland. It does not disclose which currencies the authority checks.
However, Finma warns that there is great uncertainty as to whether all projects can be completed successfully. It is also possible that individual projects were launched with fraudulent intent. Finma does not announce by when it has completed its investigations.
First bogus coin closed in Switzerland
There are already free riders on the road who pretend to be innovative digital currencies, but are not. Finma has already pulled the plug on what appears to be a crypto company: a few weeks ago, it withdrew the Quid Pro Quo e-coin from circulation. Apparently it was not a real crypto currency at all, and the initiators only deposited a small amount of material assets in the currency. A few hundred users of the e-coin are said to have paid in around 4 million francs.
So far, there are hardly any regulations as to how such fundraising should proceed. But Finma is not the only regulator that is taking care of the boom in new crypto currencies. The Chinese central bank recently banned capital raising through cryptocurrencies. UK banking regulators have warned crypto investors that their shares could lose their value.
Jordan Belfort says that everyone and their grandmother currently want to jump on the crypto bandwagon. "I don't think the idea of cryptocurrencies is wrong," Belfort told the FT. But people would jump on the topic who would corrupt the idea. He himself advises against investments with cryptocurrencies.
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