BitClout Founder Nader Al-Naji Charged with Fraud by SEC
BitClout founder Nader Al-Naji charged with fraud by the SEC for misusing $257 million in investor funds to pay for personal expenses, including rent on a Beverly Hills mansion.
Bollywood Fever: The U.S. Securities and Exchange Commission (SEC) has charged Nader Al-Naji, founder of BitClout, with fraud, alleging he used investor funds to cover personal expenses, including rent for a Beverly Hills mansion.
Al-Naji, 32, raised over $257 million through “unregistered offers and sales” of BitClout’s native token, BTCLT. The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York on Tuesday, accuses Al-Naji of misleading investors about the decentralized nature of the project.
According to the SEC, Al-Naji assured investors that the funds raised from BTCLT sales would not be used to reimburse him or BitClout employees. Contrary to these claims, the SEC alleges Al-Naji spent more than $7 million of investor funds on personal items, including the rent for a six-bedroom mansion in Beverly Hills and “extravagant cash gifts” to family members.
“As alleged in our complaint, Al-Naji attempted to evade the federal securities laws and defraud the investing public, mistakenly believing that ‘being ‘fake’ decentralized generally confuses regulators and deters them from going after you,’” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. “He is obviously wrong: as we have shown time and again, and as reflected in the SEC’s detailed allegations here, we are guided by economic realities, not cosmetic labels.”
Al-Naji’s wife and mother are also named as defendants in the complaint. In parallel to the SEC’s charges, the U.S. Attorney’s Office for the Southern District of New York has also announced charges against Al-Naji.
Previously known by the pseudonym Diamondhands, Al-Naji revealed his identity in 2021 when launching “Decentralized Social,” a blockchain project that received $200 million in funding from prominent venture firms.
The charges highlight the SEC’s ongoing efforts to regulate the cryptocurrency space and ensure that projects claiming to be decentralized adhere to securities laws and protect investor interests.
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