The BitClout founder was alleged by the Securities and Exchange Commission to have spent $7 million on personal luxury products and gifts for family members.
On July 30, the United States Securities and Exchange Commission (SEC) and the US Attorney’s Office for the Southern District of New York announced charges against Nader Al-Naji, the proprietor of BitClout.
According to the SEC’s complaint, the BitClout originator allegedly defrauded investors by squandering a portion of the $257 million in unregistered securities sold through BitClout’s native token, BTCLT.
The SEC also referenced Decentralized Social (DeSo), a recent initiative from Al-Naji, in the complaint and a corresponding press release.
In more detail, the complaint accused Al-Naji of squandering $7 million in customer funds on luxury items, including leasing a Beverly Hills residence and providing generous financial gifts to family members, despite his assurances to investors that the funds would not be used as compensation for any BitClout team members.
Al-Naji was also accused of misrepresenting the fundamental interior workings of the BitClout initiative in the SEC complaint.
BitClout’s founder, according to the securities regulator, deceived investors and legal firms by asserting that the project was decentralized, with no governing body in charge. In reality, the project was being managed behind the scenes.
The SEC also believes that communications sent to specific investors indicate that Al-Naji attempted to circumvent regulatory scrutiny by promoting the project as decentralized. The allegations were addressed by Gurbir S. Grewal, the director of the SEC’s Division of Enforcement:
“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.’”
Furthermore, the complaint included Al-Naji’s wife, mother, and affiliated business entities as relief defendants, as they were purportedly recipients of investor funds from the BitClout founder.
The opposing perspective
Jordan and Luke Lintz, the proprietors of HighKey Agency, a publications agency that also invests in the Decentralized Social project, stated in a statement to Cointelegraph that the SEC’s allegations were directed at BitClout and that the DeSo treasury remains unaffected.
The brothers denied any knowledge of Al-Naji’s personal life. They declined to provide any commentary on the purported personal reimbursements to family members that were detailed in the Securities and Exchange Commission’s complaint.
