SEC Accuses BitClout Founder Nader Al-Naji of Fraudulent Activities

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SEC Accuses BitClout Founder Nader Al Naji of Fraudulent Activities

The United States Securities and Exchange Commission (SEC), in conjunction with the US Attorney’s Office for the Southern District of New York, has charged Nader Al-Naji, the founder of BitClout, with fraud. The charges were announced on July 30 and have sent shockwaves through the crypto community.

Allegations of Misuse of Investor Funds

The SEC’s complaint alleges that Al-Naji sold $257 million in unregistered securities via BitClout’s native token, BTCLT. The SEC claims that a portion of these funds, approximately $7 million, was misused for personal luxuries, including leasing a Beverly Hills mansion and providing substantial cash gifts to family members. This alleged misuse of funds starkly contradicts Al-Naji’s promises to investors that their money would not be used as compensation for BitClout team members.

SEC Accuses BitClout Founder Nader Al-Naji of Fraudulent ActivitiesSource: SEC

Deceptive Practices and Misrepresentation

The complaint further accuses Al-Naji of misleading investors about the decentralized nature of BitClout. The SEC contends that Al-Naji portrayed BitClout as a decentralized project with no central governing body, while in reality, he was secretly running the project. This misrepresentation, the SEC believes, was an attempt to avoid regulatory scrutiny. Gurbir S. Grewal, director of the SEC’s Division of Enforcement, stated:

“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.’”

SEC Accuses BitClout Founder Nader Al-Naji of Fraudulent Activities

Family and Associated Entities Implicated

The SEC’s complaint also names Al-Naji’s wife, mother, and related business entities as relief defendants, alleging that they were recipients of misappropriated investor funds. This inclusion highlights the broader scope of the SEC’s investigation into the misuse of investor money.

Response from Decentralized Social (DeSo) Investors

In response to these allegations, Jordan and Luke Lintz, founders of HighKey Agency and investors in Al-Naji’s newer project, Decentralized Social (DeSo), emphasized that the SEC’s charges were specific to BitClout. They asserted that the DeSo treasury remains untouched and distanced themselves from any knowledge of Al-Naji’s personal financial dealings.

Also Read: Crypto Mining Fraud: South Korean Prosecutors Indict $1.3M Scam Mastermind

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