United States SEC Charged Individual for Crypto Fraud Raising $257 Million from its Social Media Platform BitClout by Selling Unregistered Native Token BTCLT Starting from 2020, Falsely Told Investors Proceeds are Not Used to Pay Himself & Employees But Spent $7 Million of Funds on Personal Expenses Including Rentals for a United States Beverly Hills Mansion & Cash Gifts to Family
31st July 2024 | Hong Kong
The United States Securities & Exchange Commission (SEC) has charged an individual (Nader Al-Naji) for crypto fraud raising $257 million from its social media platform BitClout by selling unregistered native token BTCLT starting from 2020, and with Nader Al-Naji falsely telling investors proceeds are not used to pay himself & employees but spent $7 million of the funds on personal expenses including rentals for a United States Beverly Hills mansion & cash gifts to family. United States SEC (30/7/24): “The Securities and Exchange Commission today charged Nader Al-Naji 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 (herein, “BTCLT”). According to the SEC’s complaint, starting in November 2020, Al-Naji raised more than $257 million from unregistered offers and sales of BTCLT, while falsely telling investors that proceeds would not be used to compensate him or other BitClout employees. In reality, the complaint alleges, Al-Naji spent more than $7 million of investor funds on personal expenditures like rental payments for a Beverly Hills mansion and extravagant cash gifts to family members. The SEC’s complaint further alleges that, to avoid regulatory scrutiny, Al-Naji portrayed BitClout as a decentralized project with “no company behind it … just coins and code,” and launched the project using the pseudonym “Diamondhands” to further create the illusion that the project was autonomous when he was actually behind the project. In addition, Al-Naji allegedly secured a letter from a prominent law firm opining, based on his mischaracterizations of the nature of his project, that BTCLT were not likely to be deemed securities under federal law. At the same time, Al-Naji allegedly secretly told certain investors that he was engaged in this subterfuge to avoid compliance with the law. The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges 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 complaint also names Al-Naji’s wife, mother, and wholly owned entities as relief defendants for the investor funds that Al-Naji transferred to them. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced charges against Al-Naji. The SEC’s investigation was conducted by Geoff Gettinger with the assistance of Sejal Bhakta and Pasha Salimi. It was supervised by Paul Kim and Jorge G. Tenreiro, Acting Chief of the Enforcement Division’s Crypto Assets and Cyber Unit. The SEC’s litigation will be led by Christopher Carney and Mr. Gettinger, under the supervision of James Connor and Mr. Tenreiro.”
“ United States SEC Charged Individual for Crypto Fraud Raising $257 Million from its Social Media Platform BitClout by Selling Unregistered Native Token BTCLT Starting from 2020, Falsely Told Investors Proceeds are Not Used to Pay Himself & Employees But Spent $7 Million of Funds on Personal Expenses Including Rentals for a United States Beverly Hills Mansion & Cash Gifts to Family “
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Gurbir S. Grewal, 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. He is obviously wrong: as we have shown time and again, and as reflected in the SEC’s detailed allegations here, we are guided by economic realities, not cosmetic labels. The dedicated staff of the SEC uncovered Al-Naji’s lies and will now hold him accountable for misleading investors.”
United States SEC Charged Individual for Crypto Fraud Raising $257 Million from its Social Media Platform BitClout by Selling Unregistered Native Token BTCLT Starting from 2020, Falsely Told Investors Proceeds are Not Used to Pay Himself & Employees But Spent $7 Million of Funds on Personal Expenses Including Rentals for a United States Beverly Hills Mansion & Cash Gifts to Family
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