The U.S. Securities and Exchange Commission (SEC) has charged Nader Al-Naji, founder of Bitclout (now Decentralized Social), with running a multi-million-dollar fraudulent crypto scheme. Al-Naji allegedly raised over $257 million through unregistered sales of Bitclout tokens (BTCLT) and used the funds for personal expenses. He attempted to evade regulatory scrutiny by portraying Bitclout as decentralized and using a pseudonym, the regulator detailed.
SEC Charges Bitclout Founder With Multi-Million-Dollar Crypto Fraud
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Bitclout Founder Charged in Multi-Million-Dollar Fraud Scheme
The U.S. Securities and Exchange Commission (SEC) announced on Tuesday that it has charged Nader Al-Naji, the founder of Bitclout, now known as Decentralized Social (Deso), with “perpetrating a multi-million-dollar fraudulent crypto asset scheme involving a social media platform called Bitclout and its native token of the same name.”
The SEC detailed:
Founder of the Bitclout blockchain protocol now known as Decentralized Social, or Deso, adopted the pseudonymous moniker Diamondhands to evade regulatory scrutiny.
The SEC explained that Al-Naji allegedly raised over $257 million through unregistered sales of Bitclout tokens (BTCLT) starting in November 2020. The regulator’s complaint claims Al-Naji misled investors about the use of proceeds, which he used for personal expenses, including renting a Beverly Hills mansion and giving lavish cash gifts to family members.
The securities watchdog stressed that to avoid regulatory scrutiny, Al-Naji portrayed Bitclout as a decentralized project and used a pseudonym to suggest it was autonomous, emphasizing that he even obtained a law firm’s opinion, based on misrepresentations, that BTCLT were not securities.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, commented:
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.’
In addition to the SEC’s charges, the U.S. Attorney’s Office for the Southern District of New York has also announced charges against the Bitclout founder.
What do you think about the SEC charging Bitclout founder Nader Al-Naji with fraud? Let us know in the comments section below.
