The U.S. Securities and Exchange Commission has dropped a multi-year enforcement action against Nader Al-Naji, the creator of the BitClout platform, who had been accused of misleading investors and violating federal securities laws. A joint stipulation of dismissal filed Thursday in the U.S. District Court for the Southern District of New York states that the SEC's Crypto Task Force reassessed the matter and decided to end the litigation.
Dismissal Not a Broader Policy Shift
The filing cautioned that the decision should not be interpreted as a broader policy change for other crypto cases. “The Commission’s decision to exercise its discretion and seek dismissal of this litigation is based on the particular facts and circumstances of this case,” it said. The SEC under former Chair Gary Gensler initially charged Al-Naji in 2024, alleging he raised over $257 million by selling BitClout's native BTCLT token without properly disclosing that proceeds could pay team members. Regulators also claimed roughly $7 million of investor funds were used to rent a Beverly Hills mansion and make cash gifts to family. Al-Naji was further accused of misrepresenting BitClout as fully decentralized while allegedly controlling the project behind the scenes.
Al-Naji: Most Painful Allegation Was Doubt Over Decentralization
Under the settlement, the case is dismissed with prejudice, and Al-Naji waived any claim for legal fees or expenses from the SEC. Simultaneously, the U.S. Department of Justice ended a parallel criminal wire fraud case against him. “After months of searching, using every method and tool at their disposal, including applying pressure to those around me, the government decided to dismiss their charges,” Al-Naji wrote on X. “Perhaps the allegation that hurt the most was the government’s claim that BitClout/DeSo is not fully decentralized... In the short term, I’ve got big plans for DeSo, Focus, Openfund, and HeroSwap. Every single one is best in class... Now that I’m able to operate at full capacity, free from stifling constraints, and with my reputation and network restored, I’m confident we’ll realize that potential.”
SEC Shifts Enforcement Approach Under Trump Administration
Under President Donald Trump's administration, the SEC has dropped several enforcement actions against crypto firms. Its crypto task force has signaled a move away from regulation by enforcement toward clearer rules for digital asset companies. Earlier this month, the SEC also dropped its lawsuit against TRON founder Justin Sun, which had accused him of fraud and securities law violations.