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The U.S. Securities and Exchange Commission (SEC) has agreed to terminate the civil proceedings regarding fraud against Nader Al-Naji, the founder of the crypto-focused social network BitClout. Both parties have submitted the text of a settlement agreement to the Southern District Court of New York.
The SEC reviewed the evidence and circumstances surrounding the lawsuit and concluded that closing the case would be a more prudent course of action. The parties have agreed to end the proceedings without further court action regarding the matters outlined in the complaint.
In July 2024, the SEC accused Al-Naji of an unregistered securities offering through the sale of BTCLT, the native token of BitClout. The regulator’s complaint stated that Al-Naji marketed BitClout as a decentralized social network without an operator and launched a platform called Diamondhands. However, the SEC contended that true decentralization was absent, as Al-Naji controlled token issuance, pricing, and the treasury wallets where client funds were held.
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The agency claimed that Al-Naji misappropriated investor funds, spending millions on luxury real estate and personal expenses. In 2024, the Federal Bureau of Investigation apprehended the creator of BitClout. According to law enforcement, Al-Naji failed to inform investors that after purchasing BTCLT, they would be unable to convert the token into fiat currency or other crypto assets.
Al-Naji established BitClout in 2021 as a platform where users could invest in tokens aimed at “social influence.” The project received backing from investment firms such as a16z, Sequoia, and Coinbase Ventures. Following criticism regarding user data collection and centralization, as well as legal disputes, the platform was rebranded as DeSo (Decentralized Social). Previously, Al-Naji launched the algorithmic stablecoin Basis, which raised over $133 million in 2018 from major investors, including Bain Capital Ventures, a16z, and Lightspeed.
Recently, Ethereum co-founder Vitalik Buterin remarked that content creation platforms like BitClout primarily attract well-known personalities, which hinders others who are ready to create something genuinely interesting from entering the market.
