Jordan Belfort, the former stockbroker, known as ‘The Wolf of Wall Street,’ claims that he lost more than $300,000 worth of crypto in a hack last year, and that he has since moved all of his assets from exchanges into cold storage.
Belfort went on Yahoo Finance Live last week to discuss, among other things, the fallout of the FTX collapse and crypto market sell-off.
Asked about how much he himself trusts crypto exchanges at this point, given that he has “skin in the game,” Belfort suggested that it’s none.
“So I got hacked, actually. I lost about 300-and-something thousand dollars on [crypto wallet] MetaMask last year.”
He did not specify how he got hacked, when exactly, how much in crypto was taken, or if there was (or is) any investigation into the matter.
That said, Belfort claimed that he no longer has any assets on exchanges, stating:
“I don’t have any of my money in any crypto on exchanges. It’s all off […] in a cold storage wallet, so to speak, with [crypto wallet] Ledger.”
He opined that this is “a very, very, very tough industry right now” because it’s “literally like the Wild West.”
The reason – as well as the solution – comes down to regulation, Belfort argued.
“[The industry is] in desperate need of regulation, desperate need of the SEC [US Securities and Exchange Comission] or some body to step in here and bring at least some level of order to the chaos. Even after they do that, there will still be fraud. There always is in every market.”
Asked what he thought is needed for the industry to regain trust and limit fraud, Belfort suggested that the vast majority of cryptocurrencies, some 99.99% of them, should be regulated as securities.
“Bitcoin, I don’t believe it’s a security. Bitcoin truly is a commodity or property, whatever you want to call it. It’s decentralized, so I think that’s a very different thing, Ethereum as well,” he stated.
He went on to say that there may be some other cryptos that are not securities either, but that “I don’t really own any of the others. I own those two are the only things I own. I have some small stuff, but that’s on my own, right, that I never sold, and it’s just speculative investments.”
‘FTX is not an exchange’
For the majority of the interview, the former stockbroker discussed the FTX implosion and the issues it has caused.
However, he said that there is a “misconception” about FTX, arguing that,
“The crypto world has got a strange way of putting labels and calling things, things that they’re not. Like, FTX, in my mind, is not an exchange. It’s a […] self-clearing brokerage firm.”
Per Belfort, what the company did was a fraud, stating:
“It was a brokerage firm where they co-mingled funds, and they took the money and just spent it on some lavish expenditures. But also they lost a lot of money just being lousy traders.”
There is no way of telling how many bad actors are out there in the space, he said, opining that there are likely many more. But he did name an exception.
“The only exception, I would say, is probably Coinbase, is a listed — reports to the SE — I’d be shocked to find out that Coinbase was insolvent. I mean, that would be really shocking to me.”
On the other hand, offshore companies do not report to the USA regulators, and “there is no way of knowing what they’re actually doing.”
Furthermore, there is the issue of contagions and unregulated companies exchanging funds between them, Belfort suggested, concluding that,
“[T]hey all invest in each other and borrow from each other and leverage. There’s a lot of that. I guess it’s a house of cards and mirrors at the same time, where they pump up the values. They issue their own tokens, and one person buys another. It’s insane, right?”
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