The indictment of the U.S. Securities and Exchange Commission (SEC), filed in federal court in New York, alleges that Nader Al-Naji, who acted under the pseudonym Diamondhands, created the BitClout social network by illegally cloning user profiles.
He promised investors that the network would become part of a decentralized cryptosystem that effectively invests in digital asset market tools, in particular through the acquisition of the "highly profitable" BTCLT token. According to the SEC, Al-Naji deceived investors twice by not telling them that after buying BTCLT, they would not be able to convert the token back into fiat currency or other digital assets.
In total, Al-Naji raised more than $257 million through the Bitcollout platform. According to law enforcement agencies, he used all the funds received from investors to buy luxury goods and expensive real estate.
In addition to the civil charges brought by the SEC, the FBI accuses Al-Naji of electronic communications fraud, which carries a maximum penalty of 30 years in prison.
Recall that back in 2021, Singapore's Prime Minister Lee Hsien Loong claimed that someone had created a profile on his behalf on the BitClout platform to sell BTCLT tokens, illegally using information from his account on the social network X (former Twitter).