The recent decision by the US Securities and Exchange Commission to dismiss its civil fraud lawsuit against Nader Al-Naji signifies a turning point in the ongoing saga of the BitClout blockchain project, which has been rebranded to DeSo. Initially filed in July 2024, the SEC’s lawsuit accused Al-Naji of conducting an unregistered offering by selling BTCLT, the native token associated with BitClout.
This case highlighted several allegations against him, including the improper marketing of BitClout as a decentralized platform without centralized control. Al-Naji even operated under the pseudonym “Diamondhands.” However, the SEC asserted that he retained significant control over aspects such as token issuance, pricing, and managing the treasury wallet that held investors' funds.
Furthermore, the complaint detailed allegations of misappropriating investor funds for personal expenses, which included lavish housing and familial financial support, in direct contradiction to public statements about treasury fund usage. The recent stipulation indicates that upon reevaluating the evidence, the SEC deemed dismissal of the lawsuit appropriate. The agreement to dismiss the litigation with prejudice brings closure to the allegations brought forth in the original complaint.
Al-Naji initially launched BitClout in 2021, introducing a unique platform designed for individuals to invest in tokens representing social influence, attracting significant investment from notable venture capital firms like a16z, Sequoia, and Coinbase Ventures. However, criticism arose surrounding data scraping and questions regarding the project’s decentralization. As a result, the platform underwent a rebranding to DeSo, which stands for Decentralized Social.
Prior to founding BitClout, Al-Naji successfully initiated the Basis project, an algorithmic stablecoin initiative that raised over $133 million from esteemed investors such as Bain Capital Ventures and Lightspeed. One notable angel investor in this round included Kevin Warsh, who was later appointed by Donald Trump to chair the Federal Reserve but exited the Basis project before its closure later that year.