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31/07/24
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U.S. SEC and Attorney Office in New York Initiate Lawsuit Against BitClout Founder
Yesterday, the U.S. Attorney’s Office for the Southern District of New York published a press release noting that Nader Al-Naji, founder of the BitClout protocol, was taken into custody on July 27 and has been charged with defrauding a BitClout purchaser through false and misleading representations.
Similarly, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Al-Naji as well as a few other entities and persons, alleging that he offered and sold cryptocurrency asset securities to investors while lying to them that the project was decentralized in nature.
Al-Naji created the blockchain-based platform known as BitClout with the native token called “BTCLT”. The SEC alleged that he continued to promote the project while illicitly using investor funds to enrich himself and buy luxury items for himself, his close relatives and firms.
The U.S. Attorney’s Office for the Southern District of New York said BitClout was a social media and crypto trading platform that purportedly permitted the purchase of BitClout tokens using Bitcoin.
“Al-Naji offered and sold BTCLT as a security, but never registered those offers and sales with the Commission, although he was required to do so under the federal securities laws. Al-Naji marketed BTCLT as an investment that would increase in value as the BitClout platform grew—a means of generating a return by “betting on” the success of BitClout,” reads the SEC’s filing.
Investors continued to send Bitcoin to the BitClout treasury, amassing BTC valued at over $257 million between Nov. 2020 when he initiated unregistered offers and sales of BTCLT to the present.
The U.S. Attorney’s Office for the Southern District of New York charged Al-Naji with one count of wire fraud, and he faces a maximum sentence of 20 years imprisonment.
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