The U.S. Securities and Exchange Commission (SEC) has concluded its civil enforcement action against BitClout founder Nader Al-Naji and several related defendants, saying the decision was “based on the specific facts and circumstances of this case.”
In a joint agreement filed on March 12, the U.S. District Court for the Southern District of New York, the SEC and Al-Naji agreed to settle the case, permanently ending the litigation and preventing the agency from refiling the same claims.
The U.S. Securities and Exchange Commission filed a lawsuit in July 2024 accusing Al-Naji of violating securities laws through the cryptocurrency-based social network project BitClout, which was later associated with the decentralized social blockchain DeSo. The U.S. Securities and Exchange Commission and the Department of Justice charged Al-Naji with wire fraud and selling unregistered securities.
The charges allege that Al-Naji raised approximately $257 million by selling BitClout’s native token BTCLT. They allege that he led investors to believe the money would be used to pay his and other BitClout employees’ salaries, but in reality, he used “more than $7 million in investor funds for personal expenses,” renting a Beverly Hills mansion and “lavish cash gifts.”
The case also names 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.
Debuting in early 2021, BitClout was billed as a proof-of-work blockchain designed to run and monetize social media, but it quickly became controversial. As CoinDesk reported at the time, the platform automatically created profiles for high-profile individuals without their consent by scraping their accounts on X (then still known as Twitter), leading to a cease-and-desist letter from law firm Anderson Kill, alleging violations of California’s publicity rights law.
Critics also argue that the project’s “genesis coin” model could incentivize reputational attacks, as users can profit by shorting someone’s tokens while damaging their reputation. Others are concerned that users must convert Bitcoin into BitClout’s BTCLT token to use the platform, with no easy way to convert it back, effectively locking funds on the site.
Despite the backlash, Alnagy said the project has attracted support from major venture capital firms including Andreessen Horowitz, Sequoia, Coinbase Ventures and Digital Money Group.
Nagy and the relief defendants waive any claim for attorneys’ fees or damages in connection with the investigation or litigation.