The United States Securities and Exchange Commission (SEC) has filed charges against Nader Al-Naji, the founder of BitClout, for fraud and selling unregistered securities.
The lawsuit claims Al-Naji raised $257 million by selling unregistered securities through BTCLT, BitClout's native token.
The SEC alleges that despite promises to investors that their money would not be used to pay the BitClout team, Al-Naji spent a significant portion of the funds on personal luxuries, which included renting a mansion in Beverly Hills and giving large sums of money to his family.
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The regulator also accuses Al-Naji of falsely claiming that Bitclout was decentralized when, in reality, he was in charge of the project. Gurbir S. Grewal, director of the SEC's Division of Enforcement, commented on the charges, stating:
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."
The complaint also lists Al-Naji's wife, mother, and affiliated business entities as relief defendants due to their alleged receipt of investor funds.
These charges highlight concerns about the misuse of investor funds and false representations of decentralization.
In other news, the SEC has also recently sued Silvergate, accusing it of misleading investors about the effectiveness of their Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program and their oversight of crypto clients, including FTX.
