The Securities and Exchange Commission (SEC) has charged Nader Al-Naji with orchestrating a fraudulent multi-million-dollar cryptocurrency scheme linked to a social media platform, BitClout, and its native token, BTCLT.
The SEC’s complaint alleges that, starting in November 2020, Al-Naji raised over $257 million through unregistered offers and sales of BTCLT.
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According to the SEC, Al-Naji reportedly misled investors by claiming that the funds would not be used for personal benefit. Contrary to these assurances, he allegedly spent more than $7 million on personal expenses, including rent for a Beverly Hills mansion and lavish cash gifts to family members.
To evade regulatory oversight, Al-Naji allegedly portrayed BitClout as a decentralized entity with no controlling company, using the pseudonym “Diamondhands” to mask his involvement. The complaint further asserts that he secured a legal opinion from a prominent law firm, based on mischaracterized project details, suggesting that BTCLT tokens would not be classified as securities under federal law. Simultaneously, Al-Naji reportedly disclosed to select investors his intention to skirt legal requirements.
“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,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
Read more: 15 Most Common Crypto Scams To Look Out For
Filed in the US District Court for the Southern District of New York, the SEC’s complaint accuses Al-Naji of 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. Additionally, the SEC named Al-Naji’s wife, mother, and entities under his control as relief defendants for receiving investor funds.
In a parallel action, the US Attorney’s Office for the Southern District of New York has also announced charges against Al-Naji.
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