The SEC has accused the founder of BitClout of fraud

The U.S. Securities and Exchange Commission (SEC) has filed charges against the founder of the BitClout DeSoc project, Nadar Al-Naji.

According to a press release from the department, the Web3 entrepreneur "spent more than $7 million in investor funds for personal needs, including rent for a mansion in Beverly Hills and extravagant cash gifts to family members."

Known by the pseudonym Diamondhands, 32-year-old Al-Naji raised over $257 million through "unregistered offers and sales" of a native BitClout token called BTCLT. According to the Commission, he lied to investors about the "decentralized nature of the project."

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"As alleged in our lawsuit, Al-Naji tried to circumvent federal securities laws and deceive investors, mistakenly believing that being fake decentralized would be able to mislead regulators and avoid prosecution," said Gurbir S. Grewal, director of the SEC's law enforcement division.

According to the official, the agency is guided by "economic realities, not cosmetic labels."

Al-Naji's wife and mother are also listed as defendants in the lawsuit. 

In 2017, Al-Naji founded the Basis stablecoin project (after the renaming — Basis). It soon closed due to regulatory difficulties, returning $133 million to investors. 

Earlier, the SEC accused the HyperFund crypto project of defrauding investors of $1.7 billion.