Breaking: BitClout Founder Faces $257M SEC Charge Over Crypto Fraud
U.S. Securities and Exchange Commission (SEC) has brought charges against Nader Al-Naji, the founder of the once-hyped social media platform BitClout. The SEC alleges that Al-Naji orchestrated a massive fraudulent scheme involving over $200 million in unregistered crypto asset offerings.
SEC Charges Against BitClout Founder
The U.S. Securities and Exchange Commission (SEC) has leveled serious charges against Nader Al-Naji, the founder of the social media platform BitClout, accusing him of orchestrating a fraudulent cryptocurrency scheme worth over $257 million.
The SEC’s complaint, filed today, alleges that Al-Naji conducted unregistered offers and sales of the platform’s native token, BTCLT, while misleading investors about the use of funds.
According to the SEC, Al-Naji falsely claimed that the proceeds would not be used for personal compensation. However, the complaint states that he allegedly spent more than $7 million of investor funds on personal expenses, including rent for a Beverly Hills mansion and lavish cash gifts to family members.
The SEC further alleges that Al-Naji attempted to avoid regulatory scrutiny by portraying BitClout as a decentralized project with “no company behind it,” using the pseudonym “Diamondhands” to create an illusion of autonomy. He is also accused of obtaining a legal opinion based on mischaracterizations of the project to argue that BTCLT tokens were not securities.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized that the agency is guided by economic realities rather than “cosmetic labels” when investigating such cases. The complaint charges Al-Naji with violating registration and anti-fraud provisions of federal securities laws.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York has announced criminal charges against Al-Naji. The SEC’s complaint also names Al-Naji’s wife, mother, and wholly owned entities as relief defendants for the investor funds they allegedly received.
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SEC’s Amended Complaint in Binance Case
In a separate but related development, the SEC has decided to amend its complaint in its ongoing lawsuit against Binance, Binance.US, and co-founder Changpeng Zhao. The amendment pertains to third-party crypto asset securities such as Solana, Cardano, and Polygon. The SEC now asserts that the court does not need to determine the security status of these assets at this time.
This change in approach was revealed in a joint status response filed in the U.S. District Court for the District of Columbia on July 30. The SEC informed the defendants of its intention to modify the complaint, including aspects related to third-party crypto asset securities. This amendment comes in response to Binance’s earlier motion to dismiss the case.
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