Here Is What Jordan Belfort, Nick Leeson, and Martin Shkreli Think About Bitcoin and Cryptocurrencies | by Sylvain Saurel | Jan, 2022

Of the three names I mentioned in my title, Jordan Belfort is probably the one that speaks to you the most. This financier inspired the movie “The Wolf of Wall Street” in which his character was played by Leonardo DiCaprio.

If Jordan Belfort’s scams are now well known, those of Nick Leeson and Martin Shkreli have nothing to envy to those set up by Jordan Belfort. Unfortunately for their victims!

Let’s start with Nick Leeson who was promoted at the age of 24 in the early ’90s to head of the emerging derivatives market on the Singapore Exchange for Barings Bank. In this position, Nick Leeson was in charge of organizing all the transactions for the bank’s clients, with the responsibility of ensuring the back-office and the transactions on the market itself.

In early 1995, in an attempt to make up for his already huge losses, he bet on the rise of the Asian stock markets and bought highly leveraged derivatives.

On January 17, 1995, the Kobe earthquake caused the markets to fall sharply. He then tried to compensate for his losses by increasing his positions and hoped to quickly cause a reversal of the Nikkei 225. The market continued to fall and Nick Leeson had to borrow more and more liquidity to cover his positions, until he made an accumulated loss of 860 million pounds sterling, twice the capital of the bank, causing its bankruptcy.

On February 23, 1995, Nick Leeson and his wife flee and try to reach Great Britain, taking a flight to Frankfurt, transiting via Kuala Lumpur in Malaysia. Arrived in Germany, he is recognized by the customs agents, then extradited towards Singapore on March 2, 1995. He was charged by the Singaporean justice system with fraud and forgery and, on December 2, was sentenced to six and a half years in prison and fined £70,000.

Nick Leeson was released from prison in 1999 and has since returned to live in Britain.

Now let’s turn to Martin Shkreli who can claim to be probably one of the most hated men in America today.

In 2009, Shkreli launched MSMB Capital Management. Shkreli allegedly used the assets of the then-bankrupt hedge fund MSMB Capital Management to found Retrophin, for which he was arrested for fraud by the FBI on December 17, 2015, and sentenced to 7 years in prison.

Retrophin was founded as a biotech holding company to create treatments to fight orphan diseases. In September 2014, Retrophin acquired the rights to Thiola, a drug used to treat cystinuria, a rare disease. After this acquisition, Shkreli as CEO of Retrophin decides to increase the price of Thiola by 20 times, even though he had no additional research or development costs, having only had to acquire the rights. Shkreli resigned from the company in October 2014, after Retrophin’s board decided to replace him with Stephen Aselage.

During his tenure at Retrophin, Shkreli was criticized by Citizens for Responsibility and Ethics in Washington (CREW) for allegedly manipulating the Food and Drug Administration’s regulatory process to game the stock price for his financial gain. In August 2015, Retrophin filed a lawsuit against Shkreli, seeking $65 million in restitution, claiming he breached his duty of loyalty to the biopharmaceutical company in a long-standing dispute over the use of company funds.

After leaving Retrophin, Martin Shkreli decided to create Turing Pharmaceuticals.

As Executive Chairman of Turing Pharmaceuticals, Martin Shkreli purchased the exclusive U.S. marketing rights to Daraprim, a drug used by people with AIDS, and against toxoplasmosis and malaria, classified as an essential drug by the WHO and available since 1953, for $55 million from Impax Laboratories.

It multiplied, in August 2015, the price of Daraprim by more than 50, from $13.50 to $775 per tablet. Although the patent has long since expired, no U.S. company manufactures the generic pyrimethamine. Faced with critics, Shkreli says the new price is at the lower end of what orphan drugs cost, that he is not the first manufacturer to raise the price of drugs and that the new price allows for good profits, but not outrageously high profits.

Shkreli also says that with these profits he will invest in research and development. This rhetoric has been applied by Gilead Sciences with the drug Sovaldi previously. Despite the arguments, many Americans believe that Shkreli is trying to fool them. Especially since a group of Australian high school students managed to synthesize the molecule for $20.

The Infectious Diseases Society of America, the HIV Medicine Association, and other learned societies have also come forward to denounce Shkreli’s actions. In response, Turing’s CEO says his company made mistakes in communication and is in favor of a price cut.

The most incredible thing about this obvious scam is that in India, several generics of pyrimethamine were available for between $0.05 and $0.10 per tablet.

On December 17, 2015, Martin Shkreli was arrested by the FBI for securities fraud in the Retrophin case and accused of running a Ponzi scheme. He allegedly used the assets of the then-bankrupt hedge fund MSMB Capital Management to found Retrophin. A Department of Justice press release states:

“Martin Shkreli is alleged to have engaged in several schemes to ensnare investors through a web of lies and deception.”

He is indicted on 7 counts by a federal judge in Brooklyn and resigns as CEO of Turing Pharmaceuticals. He was ordered in March 2018 to pay $7.36 million in assets to settle his litigation to duped investors and received a 7-year prison sentence from federal judge Kiyo Matsumoto. Shkreli appealed the conviction, but in 2019, an appeals court unanimously upheld the jury’s verdict.

As you can see, there are even worse people than Jordan Belfort on Wall Street. So I thought it would be interesting to take a look at what these former “Wolves of Wall Street” thought about the world of Bitcoin and cryptocurrency.

Recently, in an interview with the English newspaper “The Sun”, Jordan Belfort said for example that “the creators of Dogecoin and SHIBA INU should be put in jail for creating such scams”. And when it comes to scams, you can trust Jordan Belfort to recognize them.

Jordan Belfort spent 22 months in prison between 2004 and 2006 for “Pump & Dump” scams. His traders would buy stocks that were being dumped by traditional investors and then rampantly promote them to small, novice holders to create a bubble, allowing them to resell the shares at a handsome profit.

The “Pump & Dump” scam scheme that Jordan Belfort popularized on Wall Street is now commonly used in the cryptocurrency world. We had yet another recent example in the Fall of 2021 with SHIBA INU for example.

With over 16,000 Altcoins listed on trading platforms, scammers indeed have their pick in the cryptocurrency world. Small and illiquid Altcoins are prime targets, as they are easy to manipulate after creating a buzz on social networks.

Bernard Madoff’s Ponzi pyramids have also invaded the sector. These scams target Bitcoin and cryptocurrencies by luring investors with attractive returns to lure them into making the most money.

The scammers in the cryptocurrency world have not invented anything. They have imported and adapted the scamming techniques that have proven successful in traditional investments and currency trading. The biggest crypto heists and robberies in the industry have been carried out by hackers and hacker groups, such as Lazarus (North Korea), and not by financiers.

Jordan Belfort believes that “the sooner governments regulate cryptos, the better,” allowing the market to develop on a sounder basis. He particularly likes Bitcoin and is enthusiastic about NFTs.

Speaking of NFTs, it’s funny to note that a collective of 74 NFT collectors, called “Pleasr-DAO” bought a rap album formerly owned by Martin Shkreli, which I mentioned in the preamble, for $4 million at the end of the year.

This album, which will be turned into NFT, had been seized by the courts when Martin Shkreli was imprisoned. In February 2016, Shkreli had claimed to have been robbed of 38,000 BTC ($15 million at the time and more than $1.9 billion at the time of writing). He said he had paid this amount to an intermediary to acquire the rights to an album of the rapper Kanye West, who denied it.

If the scammers of the cryptocurrency world were inspired by the techniques of these former Wolves of Wall Street, this new universe is not ready to give a second chance to these Wall Street bets in search of easy money. Jacob Wohl, dubbed the “Wohl of Wall Street”, tried to ride the crypto and ICO craze in 2018. Banned for life from practicing on traditional markets given his many misdeeds, he had launched his company on cryptos. A failure.

Investors were not reassured by the pedigree of its founder. We understand why!

Always looking to create a bit of buzz, Nick Leeson had shared his opinion on the price of Bitcoin at the beginning of 2018 saying he was wary. Behind it, the market had collapsed by 80% with a prolonged Bear Market that everyone still remembers today. Nevertheless, the same Nick Leeson did not believe in the rebound of the Bitcoin price at the beginning of 2019, while it did happen afterward.

At the beginning of February 2021, when the price of Bitcoin was $45K, Nick Leeson said this on Twitter:

“I don’t know how this is going to end but badly in my opinion”.

The price of Bitcoin reached a new ATH two months later close to $65K. As you can see, Nick Leeson has nothing original to say about Bitcoin, especially since he doesn’t believe in the digital currency invented by Satoshi Nakamoto at all.

For the 10th anniversary of Bitcoin, Nick Leeson wrote on his blog that he preferred to stay away from Bitcoin and that Peter Baring, the founder of Barings Bank, “was wrong when he said that it is not particularly difficult to make money in the securities market”.

A way of saying that Bitcoin and cryptocurrencies were highly volatile products that only allowed speculators to make easy money.