SEC Charges BitClout Founder with $257 Million Crypto Fraud

The U.S. Securities and Exchange Commission (SEC) has filed charges against Nader Al-Naji. Al-Naji is the founder of the social media platform BitClout. The SEC accused Al-Naji of allegedly running a fraudulent cryptocurrency scheme.
The regulator also claims that Al-Naji raised over $257 million through illegal sales of the platform’s BTCLT tokens.
Key allegations from the SEC:
- Al-Naji falsely told investors their money wouldn’t be used for employee compensation.
- Over $7 million of investor funds were spent on personal expenses.
- The accused used a fake identity to create an illusion of decentralization.
- A legal opinion was obtained through misrepresentation of the project.
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According to the SEC, Al-Naji told investors that BitClout was a decentralized project with “no company behind it … just coins and code.” He allegedly used the pseudonym “Diamondhands” to hide his involvement and avoid regulatory oversight.
SEC stated that BitClout founder spent millions on luxury
The complaint states that Al-Naji spent millions on personal luxuries. These includes rent for a Beverly Hills mansion and large cash gifts to family members.
Gurbir S. Grewal, Director of the SEC’s Enforcement Division, commented on the case: “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.”
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The SEC’s lawsuit accuses Al-Naji of violating securities registration requirements and anti-fraud laws. Interestingly, the complaint also names Al-Naji’s wife and mother as relief defendants.