SEC Charges BitClout Founder with $257 Million Crypto Fraud

Published: Jul 30, 2024
Written By:
Vignesh Karunanidhi
Milk Road Writer

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.

Also read: Ethereum Remains Most Targeted Chain as Crypto Hackers Steal $572M in Q2

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.”

Also read:Ā SEC vs. Binance: Legal Battle Intensifies as Regulator Seeks to Amend Complaint

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.

Vignesh Karunanidhi

Vignesh has been a seasoned professional in the crypto space since 2017. He has been writing for over 6 years and specializes in writing and editing various types of crypto content, including news articles, long-form pieces, and blog posts, all focused on sharing the beauty of blockchain and crypto.

Vignesh Karunanidhi
Milk Road Writer
Vignesh has been a seasoned professional in the crypto space since 2017. He has been writing for over 6 years and specializes in writing and editing various types of crypto content, including news articles, long-form pieces, and blog posts, all focused on sharing the beauty of blockchain and crypto.