SEC Accuses BitClout Founder of Fraud

The United States Securities and Exchange Commission (SEC) has charged the founder of the DeSoc project BitClout, Nader Al-Naji, with fraud.

According to the agency’s press release, the Web3 entrepreneur “spent more than $7 million of investor funds on personal expenses, including rent for a mansion in Beverly Hills and extravagant cash gifts to family members.”

Known by the pseudonym Diamondhands, the 32-year-old Al-Naji raised over $257 million through “unregistered offerings and sales” of BitClout’s native token, BTCLT. The Commission alleges he misled investors about the “decentralized nature of the project.”

“As alleged in our complaint, Al-Naji attempted to circumvent federal securities laws and deceive investors, mistakenly believing that being falsely decentralized would mislead regulators and avoid prosecution,” said SEC Enforcement Division Director Gurbir S. Grewal.

According to the official, the agency is guided by “economic realities, not cosmetic labels.”

Al-Naji’s wife and mother are also named as defendants in the lawsuit. 

In 2017, Al-Naji founded the stablecoin project Basis (later renamed Basis). It soon shut down due to regulatory challenges, returning $133 million to investors.

Previously, the SEC charged the crypto project HyperFund with defrauding investors of $1.7 billion.