SEC charges BitClout founder Nader Al-Naji with fraud

On July 30, the U.S. Securities and Exchange Commission (SEC), along with the Southern District of New York's District Attorney's Office, announced charges against BitClout founder Nader Al-Naji.

The SEC complaint alleges that BitClout's founder sold $257 million in unregistered securities through BitClout's native token, BTCLT, and defrauded investors by misusing some of that money. The SEC also mentions Decentralized Social (DeSo), a new project by Al-Naji, in the complaint and corresponding press release.

The complaint alleges that Al-Naji spent $7 million of customer money on luxury items such as renting a villa in Beverly Hills and giving cash gifts to family members, despite promising investors that this money would not be used to pay any members of the BitClout team.

Source: SEC

The SEC complaint alleges that Al-Naji also mischaracterized the core operations of the BitClout project. According to the securities regulator, the founder of BitClout deceived investors and law firms by claiming the project was decentralized, with no controlling entity, but was actually operated behind the scenes.

SEC also believes that messages sent to some investors show that Al-Naji tried to avoid regulatory oversight by promoting the project as decentralized.

In addition, the wife, mother, and related business entities of Al-Naji are also listed in the complaint as co-defendants suspected of receiving money from fraudulent activities, even if they themselves are not accused of wrongdoing.

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According to Cointelegraph