Cryptocurrencies are "pump-and-dump" schemes being promoted by "scamsters", according to the real-life Wolf of Wall Street who made his money swindling investors in pump-and-dump schemes.
In an interview with The Street, Jordan Belfort predicted the crypto craze would come to a bad end and millennial investors would be "left holding the bag".
"They're all [pump-and-dump schemes]," he said.
"At this point in time the money's been made in bitcoin already. If you're in the crypto game right now and you're looking to make money — the guys that are really committing the fraud — the only way to do it is, you need to issue a new currency at the bottom and ride it up."
The founder of stockbroker Stratton Oakmont, whose memoir was adapted into the 2013 biopic starring Leonardo DiCaprio, defrauded investors out of an estimated US$200 million ($275m) through "pump-and-dump" schemes.
They involve buying and then artificially boosting the price of cheap "penny stocks" through misleading statements before cashing out. Belfort, now a motivational speaker, served 22 months of a four-year sentence after being convicted of securities fraud and money laundering in 1999.
He told The Street that the only way to keep issuing new cryptos was to "keep bitcoin up high enough so people still believe in cryptocurrency so they create the illusion of prosperity".
"This is what I did, I'm sad to say, at Stratton," he said.
"The days of bitcoin making money are over for the scamsters. Where's it going to be? It's US$8000, it could go up to US$10,000, down to US$2000, I think it's going to be zero pretty quickly, but besides that, the only way to make money is to create a new supply of some new cryptocurrency, and then by keeping the old ones high enough people will dump even more money into the new ones and they make their money on that.
"It's pure fraud and I feel so bad, because the millennials, these kids, they're not breaking the law, they're not trying to commit fraud, they're being taken for a ride right now, they've been sold a bill of goods."
Belfort said he was "trying to wake a lot of them up".
Belfort said it was "not just a matter of saying, if there's not as much tether we have to subtract US$3000 out of bitcoin". "It's not that, it's much worse than that," he said. "Because what you'll see is that they used tether to artificially support the market of bitcoin, thereby dragging more suckers into the game.
"It's maintaining the illusion of prosperity, not allowing something to go down that should be going down, and by keeping it up they bring more people into the game."
He predicted that "when that comes out", regulators would be swift to act.
"You see it happening right now, the first step is there's been a sort of industry-wide co-ordination of all the banks around the world to de-link their system from bitcoin," Belfort said.
"That's step one, isolate the virus. Step two is going to be, crush it. And that's my problem with bitcoin — I don't think bitcoin itself is a fraud, it never was a fraud, it's what people do to bitcoin that's a fraud. It lends itself to being manipulated."
He added that there was a "major disconnect between reality and fantasy" when it came to bitcoin, cryptocurrencies and blockchain technology, for which there are "major applications" inside and outside the financial sector.
"That has nothing to do with cryptocurrencies, though," Belfort said. "This current crop of cryptos, bitcoin and its babies, I think they all have zero value and they're going to zero."
It comes in the wake of another cryptocurrency theft, with nearly $190m worth of nano, or "XRB", swiped from Italian exchange BitGrail. Last month, Japanese exchange Coincheck lost around $675m in the biggest heist in history.
Since peaking at nearly US$20,000 in December, bitcoin has lost more than half its value to trade at around US$8800 at the time of writing, according to Coinmarketcap.
A report by investment bank JP Morgan said there was a "fairly high risk" of the currency dropping further to US$4605. Bloomberg Intelligence commodity strategist Mike McGlone was even more bearish, saying there was a "strong gravitational pull" towards US$900, bitcoin's average price since inception.
After a brutal sell-off sparked by a wave of negative news since the start of the year, cryptocurrencies rebounded somewhat last week following US Senate testimony by the heads of the Commodity Futures Trading Commission and the Securities and Exchange Commission.
SEC boss Jay Clayton and CFTC chair J. Christopher Giancarlo, while addressing the risk of fraud, were widely seen as striking a positive tone on the future of cryptocurrencies.