On July 30, the United States Securities and Exchange Commission (SEC), in conjunction with the US Attorney’s Office for the Southern District of New York, announced fraud charges against Nader Al-Naji, the founder of BitClout.
The SEC’s complaint alleges that Al-Naji raised $257 million through the sale of unregistered securities via BitClout’s native token, BTCLT. According to the complaint, Al-Naji misused a portion of these funds, spending $7 million on personal luxury items, including leasing a mansion in Beverly Hills and giving generous gifts to his family members. This misuse of funds directly contradicted his promises to investors that their money would not be used for compensation for BitClout team members.
The complaint also accused Al-Naji of misleading investors about the nature of the BitClout project. While he publicly claimed that BitClout was a decentralized project with no central authority, the SEC alleges that Al-Naji was actually controlling the project behind the scenes. He reportedly promoted the project as decentralized in an attempt to avoid regulatory scrutiny.
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, commented on the allegations, stating, “Al-Naji attempted to evade federal securities laws and defraud the investing public, mistakenly believing that pretending to be decentralized would confuse regulators and deter them from taking action.”
Additionally, the complaint lists Al-Naji’s wife, mother, and related business entities as relief defendants, as they allegedly received funds misappropriated from investors.
In response to these allegations, Jordan and Luke Lintz, founders of HighKey Agency and investors in Al-Naji’s new project Decentralized Social (DeSo), stated that the SEC’s accusations pertain to BitClout and not to DeSo. They asserted that the DeSo treasury remains untouched and declined to comment on Al-Naji’s alleged personal expenditures involving family members.
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