News View Non-AMP

BitClout Founder Cleared in Multi-Million Crypto Fraud Scheme as DOJ and SEC Drop Charges

Published by
Anjali Belgaumkar

U.S. authorities have decided to drop charges against Nader Al-Naji, the founder of the decentralized social network BitClout, following legal battles concerning fraud and the sale of unregistered securities. As reported by Law360, court documents reveal that on February 28, U.S. Magistrate Judge Henry J. Ricardo granted the request from federal prosecutors in New York to dismiss the complaint without prejudice, marking a big turn in the case.

SEC and DOJ Drop Charges

The Securities and Exchange Commission (SEC), which had previously accused Al-Naji of fraud, also took steps to remove its civil charges against him in late February. The SEC had alleged that Al-Naji orchestrated a “multi-million-dollar fraudulent crypto asset scheme,” using investor funds for personal expenses, including renting a mansion in Beverly Hills and giving extravagant gifts to family members.

Al-Naji’s troubles began in March 2021 when he was arrested and charged with wire fraud and the sale of unregistered securities. The SEC accused him of misleading investors by presenting BitClout as a decentralized project with no company behind it. Al-Naji, who operated under the pseudonym “Diamond Hands,” was said to have raised approximately $257 million through the sale of BitClout’s native token, BTT. However, according to the SEC, he diverted over $7 million for personal use, including luxurious living expenses and family gifts.

The SEC’s complaint against Al-Naji stressed how he tried to create the illusion of a decentralized platform while securing a letter from a well-known law firm, claiming that BTT tokens were unlikely to be classified as securities under federal law. The agency argued that Al-Naji’s attempt to avoid federal regulations by creating a “fake decentralized” project was a clear effort to defraud investors.

Ripple Effects for the Crypto Community

The legal outcome could set a significant precedent for the cryptocurrency industry, particularly for projects claiming to be decentralized. Al-Naji’s case was closely watched by many in the crypto community, as it could have wider implications for how other crypto ventures approach regulatory compliance.

Anjali Belgaumkar

Writer by choice, CryptoCurrency Writer, and Researcher by chance. Currently, focusing on financial news and analysis, as well as cryptocurrency news and data. One may not call me a crypto “Enthusiast” but trust me I'm getting there.

Recent Posts

Shiba Inu (SHIB) Price Forecast Today

SHIB price has potentially broken out of a YTD falling channel in the past few…

April 24, 2025

Arbitrum (ARB) Price Analysis: Dead Cat Bounce or Full Blown Recovery Next?

ARB price has followed a similar fractal pattern to the September 2024 bullish breakout. The…

April 24, 2025

Should You Buy More TRUMP to Have Dinner With President Trump? Will the TRUMP Price Sustain Above the Gains?

Soon after the launch, the OFFICIAL TRUMP (TRUMP) price experienced a huge pullback that has…

April 24, 2025

Whales Turn Active After Ethereum’s Strong Recovery: What’s Next for ETH Price?

Ethereum's price has jumped after being stuck in a slump for several weeks, helping it…

April 24, 2025

WIF, BONK & FLOKI Prices Attract Massive Gains—Has the Memecoin Mania Begun?

The memecoins have begun to rise as Bitcoin displays massive stability after the recent upswing.…

April 23, 2025

President Donald Trump to Hold an Exclusive Dinner For Top 220 $TRUMP Token Holders on May 22

The top 220 $TRUMP holders by May 12 will be eligible for the Gala dinner…

April 23, 2025