Jordan Belfort, who spent nearly two years in prison for scamming investors, warned that Bitcoin is full of “scammers” and “there’s no good reason” as to why it should exist.
The former stockbroker said it is “outrageous” to think that governments will allow Bitcoin to continue as an anonymous digital currency.
Speaking on CNBC on Monday, Mr Belfort said: “I was a scammer. I had it down to science, and it’s exactly what’s happening with Bitcoin.
“The whole thing is so stupid, these kids have gotten themselves so brainwashed.”
I was a scammer. I had it down to science, and it’s exactly what’s happening with Bitcoin
Mr Belfort explained his reasoning and said: “Bitcoin itself is not a scam, I don’t think.
“What’s happening is there are scams around it being perpetuated because by its very nature it’s a dark market – you can’t see what’s going on behind the scenes and people dive into that and use it to rip other off.”
When asked if there should be criminal charges taken against the so-called scammers, he said: “Of course there should be.
“95 percent of people with Bitcoin are totally legit. But it’s the five percent that kill you every time. So, yeah, if people who are scamming should go to jail.
“Those who aren’t scamming, well, I feel bad because they are probably going to lose all their money or most of it.”
Mr Belfort, who ran the brokerage firm Stratton Oakmont, said Bitcoin being linked with cryptocurrency token tether is related to the “scams” in the digital currency.
Tether is meant to be backed one-for-one by the US dollar, with the idea that the coin should have the price stability of the dollar combined with the operational ability of a cryptocurrency.
But Mr Belfort said: “My guess is that you’re going to find, probably with this tether that is linked to Bitcoin, is used to sort of, you know, supposed to be one for one with the dollar.
“My guess is that there was never one for one and it is being investigated right now. When that comes to light it’s going to be a disaster for the whole basket of cryptos. That’s my guess.”
Bitcoin price is $7,048.06 at 17:07 BST, on Tuesday, according to CoinDesk. It saw its highest price in December when it hit almost $20,000.
Bitcoin leaped by more than $200 overnight on Monday in an inexplicable boost in price.
The early hours of Tuesday morning saw Bitcoin jump from $6,766 to $6,900 in less than an hour.
Bitcoin has been praised by bullish crypto experts with Fundstrat’s Thomas Lee saying the cryptocurrency’s correlation between emerging markets indicates Bitcoin could end 2018 “explosively higher” than ever before.
Bitcoin price: Wolf of Wall Street says investors are “brainwashed” (Image: GETTY•CNBC)
Mr Lee of Fundstrat Global Advisors said there is an “important correlation” between emerging markets and Bitcoin.
Speaking on CNBC, Mr Lee said: “In general, we thinking mining and fundamental factors like network effect really drive Bitcoin’s value. But macro factors have an effect on network value.”
Mr Lee referenced a chart showing two lines – the MSCI emerging markets index relative to the S&P and Bitcoin’s price.
“You might wonder ‘what’s the linkage? Why do we think they’re connected?’. Well, there are two factors.
“The first is hedge funds, which typically rent emerging markets stock. So they do risk on, risk off. When they are risk off Bitcoin also suffers because they are risk off.
“The second reason has to do with wealth effect. Wealth effect means if you’re living in an emerging market and you see your stock market fall hugely it means you have a lot less money to buy Bitcoin so that affects the network effect because you can’t buy Bitcoin.
“So I think there’s two reason why an emerging markets index actually influences Bitcoin.”
Mr Lee explained the trend and later said: “Until emerging markets begin to turn, I think in some ways that correlation is going to hold and tell us that sort of the risk on mentality is those buyers aren’t buying Bitcoin.”
The bullish cryptocurrency expert said if the dollar weakens and the Federal Reserve halts its hike rate policy then both areas of the market could surge.
Lastly, Mr Lee said: “I still think it’s possible.”
He added: “Bitcoin could end the year explosively higher.”