The U.S. Securities and Exchange Commission (SEC) has discontinued its civil action against BitClout founder Nader Al-Naji and several associated defendants, saying the decision was “based on the particular facts and circumstances of this case.”
In a joint declaration filed 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 filing the same complaints again.
The SEC filed a complaint 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 Department of Justice charged Al-Naji with wire fraud and selling unregistered securities.
The charges claimed that Al-Naji raised approximately $257 million through the sale of BitClout’s native token BTCLT. They alleged that he led investors to believe that the money would be used to pay him and other BitClout employees, but instead spent “more than $7 million of investor funds on personal expenses,” renting a Beverly Hills mansion 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 billed as a proof-of-work blockchain designed to manage and monetize social media, but quickly sparked controversy. The platform automatically created profiles for personalities by deleting their accounts on
Critics have also argued that the project’s “creator coin” model could encourage reputational attacks, as users could profit from shorting someone’s token while damaging their reputation. Others raised concerns that users had to convert bitcoin to BitClout’s BTCLT token to use the platform without an easy way to convert it back, effectively blocking funds on the site.
Despite the backlash, Al-Naji said the project has attracted support from major venture capital firms, including Andreessen Horowitz, Sequoia, Coinbase Ventures and Digital Currency Group.
Al-Naji and Defendants have waived any claims for attorneys’ fees or damages relating to the investigation or litigation.
