SEC Charges BitCloud Founder Nader Al-Naji with Fraud

The U.S. Securities and Exchange Commission (SEC) has charged Nader Al-Naji, the founder of BitCloud, with fraud after allegations emerged that he misused investors’ funds for personal expenses, including rent on a mansion in Beverly Hills.

Fundraising and Allegations

Al-Naji, aged 32, raised over $257 million through unregistered offerings of a native token known as BTCLT, part of the blockchain-based platform BitClout. According to the SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, Al-Naji reportedly misled investors about the project’s decentralized nature.

The SEC claims that while raising millions from the sale of BTCLT, he assured investors that their money would not be used for personal reimbursement or for BitClout employees. Contrary to his assurances, Al-Naji allegedly spent more than $7 million on personal luxuries, which included rent for a six-bedroom mansion in Beverly Hills and extravagant cash gifts to family members.

SEC Statement

Gurbir S. Grewal, the director of the SEC’s Division of Enforcement, stated, “As alleged in our complaint, Al-Naji attempted to evade federal securities laws and defraud the investing public, mistakenly believing that being ‘fake’ decentralized generally confuses regulators and deters them from going after you. He is obviously wrong.” The SEC emphasizes that their actions are dictated by economic realities rather than mere labels.

Legal Actions

Both Al-Naji’s wife and mother are also named as defendants in the complaint. Additionally, the U.S. Attorney’s Office for the Southern District of New York announced parallel charges against him.

Previously known as Diamondhands, Al-Naji revealed his true identity in 2021 when launching the project “Decentralized Social,” which received $200 million in funding from well-known venture firms.