Jordan Belfort Warns of "Massive Victims" in GameStop and AMC Stock Manipulation

"There is some sort of loose crime going on, but it's going to be a very tough one to prove, I think," says the 'Wolf of Wall Street' author and film subject.

Jordan Belfort says that those jumping on board a handful of stocks that are going through the roof due to Reddit users are playing with fire.

The Wolf of Wall Street author and film subject said in an interview with CNN Business that something illegal is likely going on as stocks such as GameStop and AMC have skyrocketed via hype mostly on Reddit.

"If you could prove that they are actually colluding together, then that would be illegal," said Belfort, who amassed a fortune in the 1990s as a stockbroker in New York City with his own firm before spending 22 months in prison for fraud and corruption. He published his memoir, The Wolf of Wall Street, in 2007, which was adapted into a 2013 Martin Scorsese film with the same name starring Leonardo DiCaprio.

"The problem is it is sort of this loose collision where one person says 'Let's stick together and stay strong.' And theoretically, that's illegal," he said. "But I doubt that the [U.S. Securities and Exchange Commission] would try to make a case out of something like that."

Belfort said in the interview that the "average person" could actually make a lot of money through the hot stocks, but they could lose it all, too. "It's truly a modified pump and dump because, at the end of the day, it will most certainly go back down because it's not trading on any rational, fundamental value," he told CNN.

Belfort cautioned, "Just remember, every time the market goes up, GameStop goes up, it's going to be harder and harder to make that next move up because the market cap is just not sustainable. So, at a certain point, someone has to be crossing out the people who are selling and moving on to the next one."

Around 9 a.m. on Thursday, GameStop took a huge dive, down nearly 40 percent.

Belfort said people are going to get hurt, and it will likely be the average, lower-income individuals who attempt to catch the golden goose too late.

"The ones getting in at the end of the party … there are going to be some massive victims in this, most certainly," he said. "There is some sort of loose crime going on, but it's going to be a very tough one to prove, I think."