The SEC has charged BitClout Founder with a $257 million fraudulent crypto scheme that involved the misuse of investor funds and unregistered asset offerings.
Nader Al-Naji, the proprietor of the once-hyped social media platform BitClout, has been charged by the U.S. Securities and Exchange Commission (SEC). Al-Naji is accused by the Securities and Exchange Commission of orchestrating a fraudulent scheme involving the sale of over $200 million in unregistered crypto-asset offerings.
BitClout Founder Faces Securities and Exchange Commission Charges
Nader Al-Naji, the founder of the social media platform BitClout, has accused the U.S. Securities and Exchange Commission (SEC) of orchestrating a fraudulent cryptocurrency scheme worth more than $257 million. The SEC has filed severe charges against him.
Al-Naji is accused of conducting unregistered offers and sales of the platform’s native token, BTCLT, and misrepresenting investors regarding the use of funds, according to the SEC’s complaint submitted today.
Al-Naji made a false claim that the proceeds would not be used for personal compensation, according to the Securities and Exchange Commission (SEC). Nevertheless, the complaint alleges that he diverted over $7 million in investor funds to cover personal expenditures, such as the rent of a Beverly Hills mansion and extravagant cash gifts to family members.
The SEC also alleges that Al-Naji attempted to circumvent regulatory scrutiny by presenting BitClout as a decentralized project with “no company behind it,” employing the pseudonym “Diamondhands” to create an illusion of autonomy. He is also accused of procuring a legal opinion that argued that BTCLT tokens were not securities based on mischaracterizations of the project.
The agency’s investigation of such cases is informed by economic realities rather than “cosmetic labels,” as emphasized by Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. Al-Naji is accused of violating the registration and anti-fraud provisions of federal securities laws in the complaint.
In a concurrent proceeding, the U.S. Attorney’s Office for the Southern District of New York has disclosed criminal charges against Al-Naji. The SEC’s complaint also names Al-Naji’s wife, mother, and wholly-owned entities as relief defendants for the investor funds they allegedly received.
In the Binance case, the SEC’s amended complaint
In a separate but related development, the SEC has decided to amend its complaint in its ongoing litigation against Binance, Binance.US, and co-founder Changpeng Zhao. The amendment is relevant to third-party crypto asset securities, including Polygon, Cardano, and Solana. The SEC maintains that the court is not required to ascertain the security status of these assets.
This shift in strategy was disclosed in a joint status response submitted to the U.S. District Court for the District of Columbia on July 30. The SEC notified the defendants of their intention to amend the complaint, including provisions concerning third-party crypto asset securities. This amendment is in response to Binance’s previous motion to terminate the case.
