- SEC charged BitClout founder Nader Al-Naji with investor fraud.
- Al-Naji allegedly raised $257 million from selling fake native tokens.
- Al-Naji is also said to have spent $7 million of these funds on extravagant cash and gifts.
The Securities and Exchange Commission (SEC) filed charges on Tuesday against Nader Al-Naji, founder of crypto social media platform BitClout. The SEC alleges that he defrauded investors and conducted an unregistered securities offering.
SEC charges Al-Naji with breaking securities laws
The Office for the Southern District of New York and the SEC accused BitClout CEO Nader Al-Naji of breaking securities laws by selling unregistered tokens to the public.
The filing alleged that Al-Naji sold unregistered native tokens worth $257 million under the guise of the supposedly decentralized social media platform BitClout. The BTCLT token and the Decentralized Social (DeSo) platform were used to defraud investors, the SEC claimed.
"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 Gubir S. Grewal, SEC's Division of Enforcement Director.
Additionally, Al-Naji was accused of spending $7 million of the money raised during its token offerings luxuriously, including buying a mansion in Beverly Hills and extravagant gifts.
BitClout was founded in 2021 by Al-Naji, allowing users to create content, share photos, and financially support posts they like through a diamond icon.
The SEC's case against BitClout has brought the regulator under fire again, this time after several crypto community members claimed that the SEC is acting outside its jurisdiction.
Adam Cochran posted on X:
"Today's SEC case against DESO/Bitclout is a great example of some of the dirty games the current SEC plays and why they need to be replaced by any administration moving forward."
Furthermore, the filing included claims that Al-Naji's wife, mother, and colleagues were involved in spending BitClout's funds.
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