Virtual digital currency Bitcoin “is a fraud” that is only fit for organised criminals, murderers and people living under repressive regimes such as North Korea, JP Morgan boss Jamie Dimon has warned.
Predicting the cryptocurrency will eventually be closed down by governments around the world, Dimon told an audience at a New York banking conference he would sack any of his employees who were caught trading in Bitcoin.
“The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart,” Dimon said.
“If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than US dollars. So there may be a market for that, but it would be a limited market.”
Voicing his shock that so many investors have been unable to see Bitcoin for what it is, he forecast the currency will “eventually blow up”, but said its value could soar as high as $20,000 (€16,688) before that happens.
Bitcoin’s value fell by around 5% after Dimon made his comments, dipping below the $4,000 mark after reaching close to $4,700 last month.
Dimon was speaking after Bitkan – one of China’s most popular over-the-counter (OTC) cryptocurrency trading services – announced it would suspend OTC Bitcoin and Bitcoin cash trades from Thursday.
Bitcoin, the value of which had quadrupled since December before its recent dip, is being accepted by a growing number of traditional retailers, having initially been associated with the purchase of illicit items such as drugs and firearms on dark web marketplaces.
The cryptocurrency is popular among criminals due to the anonymity it offers, and the fact that it allows payments to be made without the involvement of a bank or any other type of regulated financial institution.
As well as being the preferred currency of traders selling illegal goods and services on the dark web, hackers behind ransomware attacks such as May’s global WannaCry outbreak typically demand payment in Bitcoins.
Dimon’s comments came as the UK’s Financial Conduct Authority (FCA) warned that investors considering putting money into Initial Coin Offerings (ICOs) – an unregulated method of raising funds for new cryptocurrency ventures – should be prepared to lose all of their money.
“You should be conscious of the risks involved and fully research the specific project if you are thinking about buying digital tokens,” the FCA said in a statement posted on its website.
“You should only invest in an ICO project if you are an experienced investor, confident in the quality of the ICO project itself and [are] prepared to lose your entire stake.”