Nader Al-Naji, also known as 'Diamondhands,' is the founder of BitClout, a blockchain social media platform that has recently come under scrutiny.

The U.S. Securities and Exchange Commission (SEC) has charged Al-Naji with fraud and the sale of unregistered securities related to BitClout.

Al-Naji allegedly raised $257 million from investors without registering the offering with the SEC, misleading them about the project's decentralization.

He is accused of selling unregistered securities through BitClout's token, BTCLT, while claiming the project was decentralized.

The SEC's complaint alleges that Al-Naji attempted to evade federal securities laws by creating a facade of decentralization to mislead regulators.

According to the SEC, Al-Naji misused over $7 million of investor funds for personal expenses, including luxury items and gifts to family members.

The complaint also names Al-Naji's wife and mother as relief defendants for the funds he transferred to them.

Al-Naji reportedly obtained a misleading opinion letter from a law firm, falsely asserting that BTCLT tokens were unlikely to be classified as securities.

BitClout faced significant backlash for scraping Twitter profiles to create a 'social stock market' for celebrities, leading to legal threats from individuals like Brandon Curtis.

Al-Naji faces parallel criminal charges in the Southern District of New York, with a maximum sentence of 20 years if convicted.

Gurbir S. Grewal, director of the SEC’s Division of Enforcement, emphasized that Al-Naji's belief that being 'fake' decentralized would protect him from scrutiny was misguided.

By adopting the pseudonym 'Diamondhands,' Al-Naji obscured his leadership role and misrepresented the project's structure to potential investors.