The U.S. Securities and Exchange Commission has agreed to dismiss its civil fraud lawsuit against Nader Al-Naji, the founder of blockchain project BitClout, now DeSo, according to a joint stipulation filed this week in the Southern District of New York.
The SEC initially filed a complaint in July 2024, accusing Al-Naji of conducting an unregistered securities offering through the sale of BTCLT, BitClout’s native token.
Al-Naji reportedly marketed BitClout as a decentralized project with no central operator, even launching the platform under the pseudonym “Diamondhands.” The SEC claimed that despite these claims, he retained control over token issuance, pricing, and the treasury wallet containing investor funds.
The complaint also alleged that Al-Naji misused investor funds, spending millions on personal expenses, including luxury housing and transfers to family members, while publicly stating that treasury funds would not be used for personal compensation.
In the joint stipulation, the SEC said it reevaluated the evidence and circumstances of the case and decided the dismissal was appropriate. The parties have agreed to dismiss the litigation with bias based on the conduct alleged in the complaint.
Al-Naji founded BitClout in 2021 as a decentralized Twitter-like platform where users could invest in tokens representing social influence. The project has received funding from prominent investors such as a16z, Sequoia and Coinbase Ventures.
After facing criticism for the harvesting of user data and questions about its decentralization, as well as legal challenges, the platform was renamed DeSo (Decentralized Social).
Prior to BitClout, Al-Naji launched Basis, an algorithmic stablecoin project that secured over $133 million from high-profile investors including Bain Capital Ventures, a16z, and Lightspeed in 2018.
Kevin Warsh, Donald Trump’s chosen Fed chairman, participated in the round as an angel investor but left later that year when the project was shut down.
Disclosure: This article was edited by Vivian Nguyen. For more information on how we create and review content, see our editorial policy.
