The Securities and Exchange Commission claimed the BitClout founder spent $7 million on personal luxury goods and gifts to family members.
On July 30, the United States Securities and Exchange Commission (SEC), alongside the US Attorney’s Office for the Southern District of New York, announced charges against BitClout founder Nader Al-Naji.
The SEC’s complaint alleged the BitClout founder sold $257 million in unregistered securities through BitClout’s native token, BTCLT, and defrauded investors by misusing a portion of those funds. The SEC also named Decentralized Social (DeSo), a newer project from Al-Naji, in the complaint and a corresponding press release.
More specifically, the complaint accused Al-Naji of spending $7 million in customer funds on luxury items like leasing a Beverly Hills mansion and giving generous cash gifts to family members despite promising investors that funds would not be used as compensation for any BitClout team members.
The SEC complaint claimed that Al-Naji also mischaracterized the core inner workings of the BitClout project. According to the securities regulator, the BitClout founder misled investors and legal firms by claiming the project was decentralized, with no governing company controlling It, yet was running the project behind the scenes.
The SEC also believes that messages to certain investors reveal that Al-Naji sought to avoid regulatory scrutiny by promoting the project as decentralized. Gurbir S. Grewal, director of the SEC’s Division of Enforcement, remarked on the allegations:
“As alleged in our complaint, 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.’”
Additionally, Al-Naji’s wife, mother, and related business entities were also listed in the complaint as relief defendants because they were alleged recipients of investor funds from the BitClout founder.
The other side of the story
In a statement to Cointelegraph, Jordan and Luke Lintz, founders of HighKey Agency, a publications agency that also invests in the Decentralized Social project, said that the SEC’s allegations were against BitClout and claimed that the DeSo treasury remains untouched.
The brothers said they knew nothing about Al-Naji’s personal life and didn’t comment on the alleged personal reimbursements to family members specified in the Securities and Exchange Commission’s complaint.
