The U.S. Securities and Exchange Commission has dropped a multi-year case against Nader Al‑Naji, who had been accused of misleading investors and violating federal securities laws tied to the launch of the BitClout platform.
Summary
- SEC has dropped its fraud and securities case against BitClout founder Nader Al-Naji after the agency’s crypto task force reassessed the matter and moved to dismiss the litigation.
- Regulators had accused Al-Naji of raising more than $257 million through BTCLT token sales and using part of the proceeds to fund personal expenses, including a Beverly Hills mansion.
- The case was dismissed with prejudice, while the U.S. Department of Justice also ended a parallel wire fraud case tied to the BitClout project.
A joint stipulation of dismissal filed with the United States District Court for the Southern District of New York on Thursday said the SEC’s crypto task force had reassessed the matter and decided to end the litigation.
However, the filing warned that the decision should not be interpreted as a broader policy shift that would automatically extend to other crypto-related cases.
“The Commission’s decision to exercise its discretion and seek dismissal of this litigation is based on the particular facts and circumstances of this case,” the filing said.
Al-Naji, a former Google engineer and the founder of the DeSo blockchain, was first charged by the SEC in 2024, just years after launching BitClout in March 2021. Subsequently, a cease and desist order was issued against the platform.
In its complaint at the time, the SEC under former chair Gary Gensler accused Al-Naji of raising more than $257 million by selling BitClout’s native BTCLT token without properly disclosing that the proceeds could be used to pay BitClout team members.
The commission also accused Al-Naji of using funds raised from investors to finance a lavish personal lifestyle. According to the SEC, roughly $7 million of the proceeds were used to cover rent for a Beverly Hills mansion and to make cash gifts to family members.
Regulators further alleged that Al-Naji mischaracterized the inner workings of the platform by presenting BitClout as fully decentralized even though he was allegedly controlling the project behind the scenes.
Under the terms of the settlement, the case has now been dismissed with prejudice, and Al-Naji has agreed to waive any claims for reimbursement of legal fees or expenses from the SEC.
Simultaneously, the U.S. Department of Justice has also ended a parallel criminal case against Al-Naji that had accused him of wire fraud.
“After months of searching, using every method and tool at their disposal, including applying pressure to those around me, the government decided to dismiss their charges,” Al-Naji wrote in an X post.
“Perhaps the allegation that hurt the most was the government’s claim that BitClout/DeSo, the blockchain that I’ve been working on for years now, is not fully decentralized […] In the short term, I’ve got big plans for DeSo, Focus, Openfund, and HeroSwap (my team’s core products). Every single one is best in class at what it does and a potential billion dollar business on its own. Now that I’m able to operate at full capacity, free from stifling constraints, and with my reputation and network restored, I’m confident we’ll realize that potential,” he added.
Under President Donald Trump’s administration, the SEC has dropped several enforcement actions against crypto firms. At the same time, the agency’s crypto task force has said it intends to move away from regulation by enforcement and toward a more collaborative framework built around clearer rules for digital asset companies.
Earlier this month, the SEC also dropped its lawsuit against Justin Sun, which had accused the TRON founder of fraud and securities law violations.
No Comment! Be the first one.