Jordan Belfort, convicted scammer-turned-motivational speaker, is not a fan of Tether.
In an interview with TheStreet, a financial news website, Belfort referred to the company as “a massive fraud”.
Tether is a cryptocurrency that ties the value of its tokens with the US dollar, and purports to always hold dollar reserves equal to the number of tokens in circulation, so that their value is reliably backed up. It claims on its website that “reserve holdings are published daily and subject to frequent professional audits. All tethers in circulation always match our reserves.”
In reality, things seem a little less kosher. The promised audits have not been so regular, and those that have appeared have been far from exhaustive, which has made people very suspicious – especially when we consider that there are almost 2.2 billion dollars worth of Tether tokens in circulation at the moment.
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There has been some suspicion that Tether is printing tokens based on nothing, and that these tokens are being used to prop up Bitcoin. One report claimed that without Tether tokens, Bitcoin would be worth 25% less than it is today.
Belfort said in the interview that he strongly suspects that Tether is a con: “They used Tether to artificially support the market of Bitcoin, thereby dragging more suckers into the game. It’s mainting the illusion of prosperity, not allowing something to go down that should be going down, and by keeping it up they bring in more people into the game.”
He attributes much of the rise of Bitcoin to this artifical support, as in his opinion it should have crashed long ago. He said that this is why we are seeing banks decoupling themselves from cryptocurrency, saying that they are “isolating the virus”. This is not entirely accurate analysis of the present situation, as the general trend is that banks are initially sceptical of blockchain technology but increasingly adopting it, if not the cryptocurrencies that attracted the attention in the first place.
However, he then said: “I don’t think Bitcoin itself is a fraud, I don’t. It’s what people do to Bitcoin that’s a fraud… it never was a fraud, it attracts people and it lends itself to being manipulated…”
Doubtless the Bitcoin community will be comforted by his sympathy.
Jordan Belfort founded a company called Stratton Oakmont in the late 1980s, through which he ran a boiler room/pump and dump-type operation for a period of 7 years. His actions led to investors losing around 200 million dollars, and he received a 4-year jail term.
Released after just under 2 years, he has since published books and gone on speaking tours. He became famous after a movie about his fraud and debauched lifestyle, directed by Martin Scorsese and starring Leonardo DeCaprio, was released to critical acclaim.