BitClout Founder Nader Al-Naji Sued By the SEC

Nader Al-Naji, BitClout founder, was sued by the US Securities and Exchange Commission (SEC) for misappropriating $7 million of investor money. He allegedly used it to fund his lavish lifestyle, like paying for the lease on his Beverly Hills mansion and giving cash gifts to family members.

The SEC is also holding him accountable for selling $257 million worth of unregistered securities through the BTCLT token, native to the BitClout project. Funds that Al-Naji misused originate from here.

“From at least November 2020 until the present, Defendant Al-Naji raised more than $257 million by offering and selling crypto asset securities to investors while lying to them about the supposedly “decentralized” nature of the project he was promoting and while illegally diverting millions of investor funds into luxury purchases to enrich himself, his close relatives, and his companies,” read the SEC court filing.

Al-Naji is also alleged to have lied to investors about the project being decentralized. The SEC believes he controlled the project behind the scenes while using the decentralized tag to keep regulators from looking at its operations. The statement further mentioned, “In a deceptive attempt to avoid regulatory scrutiny, Al-Naji sought to portray BitClout as a “decentralized” platform with “no company behind it … just coins and code.””

It also states that he used a pseudonym—Diamondhands—to talk to investors, promising them that the bitcoin they used to buy the BTCLT token would not be utilized for personal and project-related purposes. Having users believing their funds would sit in a treasury, Al-Naji used the funds for his personal gain.

He also gave “extravagant gifts of cash (totaling at least $2.9 million) to family members, including Relief Defendants Buse Desticioglu Al-Naji (his wife) and Joumana Bahouth Al-Naji (his mother).” Moreover, BitClout’s employees received payments from investor funds, something he promised he would not do with their funds.

Al-Naji is popular for founding the Decentralized Social (DeSo) protocol.

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