The U.S. Securities and Exchange Commission (SEC) ended its civil enforcement action against BitClout founder Nader Al-Naji and several related defendants, saying the decision was “based on the particular facts and circumstances of this case.”
In a joint stipulation filed on March 12, the U.S. District Court for the Southern District of New York, the SEC and Al-Naji agreed to close the case, permanently ending the litigation and preventing the agency from re-filing the same claims.
The SEC filed the lawsuit in July 2024, accusing Al-Naji of violating securities laws through the crypto social network project BitClout, later associated with the decentralized social blockchain DeSo. The SEC and the Department of Justice charged Al-Naji with wire fraud and selling unregistered securities.
The charges claimed that Al-Naji raised approximately $257 million from the sale of BitClout’s native token, BTCLT. They allege that he led investors to believe that the money would be used to pay him and other BitClout employees, but instead he spent “more than $7 million of investor funds on personal expenses,” renting a mansion in Beverly Hills, and “extravagant cash gifts.”
The case also named several “relief defendants,” including Buse Desticioğlu Al-Naji, Joumana Bahouth Al-Naji, Intangible Holdings LLC, Firestorm Media LLC, Viridian City LLC and the DeSo Foundation.
BitClout, which debuted in early 2021, was promoted as a proof-of-work blockchain designed to run and monetize social media, but it quickly sparked controversy. The platform automatically created profiles for prominent figures by scraping their accounts on
Critics also argued that the project’s “creator coin” model could incentivize reputation attacks, because users could benefit from shorting someone’s token while damaging their reputation. Others expressed concern that users would have to convert bitcoin to BitClout’s BTCLT token to use the platform without an easy way to convert it back, effectively locking funds on the site.
Despite the backlash, Al-Naji said the project attracted backing from major venture firms including Andreessen Horowitz, Sequoia, Coinbase Ventures and Digital Currency Group.
Al-Naji and the defendants waived any claims for attorneys’ fees or damages related to the investigation or litigation.
