BitClout creator Nader Al-Naji, also known as Diamondhands, is facing charges from both the US Securities and Exchange Commission (SEC) and the Department of Justice for his alleged involvement in a fraudulent crypto asset scheme. The SEC claims that Al-Naji raised over $250 million through unregistered sales and offerings of BitClout’s native token, BTCLT.
According to the complaint, Al-Naji used investor funds for personal expenses, including renting a mansion in Beverly Hills and giving extravagant cash gifts to his wife and mother. The SEC also alleges that he spent over $7 million of investor funds.
The DOJ’s Southern District of New York office has also charged Al-Naji, accusing him of attempting to evade federal securities laws and defraud investors. Gurbir S. Grewal, director of the SEC’s division of enforcement, stated that Al-Naji believed that being “fake” decentralized would confuse regulators and deter them from taking action.
In 2021, Al-Naji rebranded BitClout to DeSo, opening the network to other apps and raising over $200 million from firms like Andreessen Horowitz and Winklevoss Capital. Despite the allegations, BitClout’s operational bitcoin wallet still contains a significant amount of BTC.
Al-Naji has faced criticism in the past, including accusations of operating Ponzi schemes. This latest development adds to the controversy surrounding his ventures in the crypto space.
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