SEC Charges BitClout Founder Nader Al-Naji in a $257M Crypto Fraud Case
- The SEC has charged BitClout founder.
- The regulator accused the founder of engaging in a multimillion-dollar fraud scheme.
- The founder faces a parallel action by the U.S. Attorney’s Office for the Southern District of New York.
On Tuesday, the U.S. Securities and Exchange Commission ( SEC ) charged Nader Al-Naji, the founder of the social media platform BitClout, with perpetrating a multimillion-dollar fraudulent cryptocurrency scheme.
The SEC alleged that starting in November 2020, Al-Naji raised over $257 million from unregistered offers and sales of BitClout’s native token BTCLT, which he reportedly misrepresented through a letter from a prominent law firm as “not likely to be deemed securities under federal laws.”
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At the same time, the regulator suspected that Al-Naji secretly told certain investors that he was involved in the subterfuge to avoid compliance with the law.
While Al-Naji had promised investors that proceeds wouldn’t be used to compensate him or other BitClout employees, he allegedly spent over $7 million of investor funds on personal expenditures like extravagant cash gifts to family members and rental payments for a Beverly Hills mansion.
The SEC’s Action
Per the statement, the SEC has filed a complaint in the U.S. District Court for the Southern District of New York, charging Al-Naji with violating the registration and anti-fraud provisions of the Securities Act of 1933 and the anti-fraud provisions of the Securities Exchange Act of 1934.
“The dedicated staff of the SEC uncovered Al-Naji’s lies and will now hold him accountable for misleading investors.” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stated.The SEC’s complaint has mentioned Al-Naji’s spouse, mother, and wholly-owned entities as relief defendants for the investor funds that Al-Naji transferred to them. Meanwhile, the U.S. Attorney’s Office for the Southern District of New York today initiated a parallel action against Al-Naji.
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