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- BitClout founder Nader Al-Naji charged with wire fraud and selling unregistered securities by SEC and DOJ, allegedly misusing $257 million raised from token sales.
- Al-Naji accused of spending over $7 million on personal expenses, including a Beverly Hills mansion, despite telling investors funds were for employee compensation.
- SEC enforcement director Grewal emphasizes the agency’s focus on economic realities over “cosmetic labels” in pursuing crypto fraud cases.
The founder of the cryptocurrency social media platform BitClout has been charged with wire fraud and the sale of unregistered securities by the US Securities and Exchange Commission (SEC) and the Department of Justice (DoJ).
Court documents reveal that Nader Al-Naji raised about $257 million by selling BitClout’s native token, BTCLT. Al-Naji allegedly misled investors into believing the funds would be used to compensate him and other BitClout employees, but instead, he reportedly spent over $7 million on personal expenses, including renting a mansion in Beverly Hills and giving lavish cash gifts to family members, according to an SEC press release issued on Tuesday.
“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,’” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement, in a statement.
“He is obviously wrong: as we have shown time and again, and as reflected in the SEC’s detailed allegations here, we are guided by economic realities, not cosmetic labels.”
Parallel criminal charges have been filed against Al-Naji by prosecutors in the Southern District of New York. Al-Naji has been charged with one count of wire fraud for the BitClout scheme, a charge which carries a maximum sentence of 20 years in prison if convicted.
Al-Naji’s wife and mother are also listed as defendants in the complaint. Additionally, prosecutors in the Southern District of New York have also filed criminal charges against Nader Al-Naji. He faces one count of wire fraud related to the BitClout scheme, which carries a potential maximum sentence of 20 years in prison if convicted.
Al-Naji, who previously used the pseudonym Diamondhands, revealed his identity in 2021 when launching “Decentralized Social.” This blockchain project secured $200 million in funding from prominent venture firms.
