The U.S. Securities and Exchange Commission (SEC) indictment, filed in federal court in New York, alleges that Nader Al-Naji, who operated under the pseudonym Diamondhands, created the social network BitClout by illegally cloning the profiles of X.
He promised investors that the network would be part of a decentralized cryptosystem that effectively invests in digital asset market instruments, specifically through the purchase of the “high-yield” BTCLT token. As the SEC notes, Al-Naji deceived investors twice by failing to inform them that after purchasing BTCLT, they would not be able to convert the token back into fiat currency or other digital assets.
In total, Al-Naji raised more than $257 million through the BitcClout platform. According to law enforcement agencies, he used all the funds received from investors to purchase luxury items and expensive real estate.
In addition to the civil charges brought by the SEC, the FBI is charging Al-Naji with wire fraud, which carries a maximum penalty of 30 years in prison.
Recall that back in 2021, Singapore Prime Minister Lee Hsien Loong claimed that someone had created a profile on the BitClout platform in his name to sell BTCLT tokens, illegally using information from his account on the social network X (formerly Twitter).
Source: Bits
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