Current:Home > MyEntrepreneur who sought to merge celebrities, social media and crypto faces fraud charges-InfoLens
Entrepreneur who sought to merge celebrities, social media and crypto faces fraud charges
View Date:2024-12-23 11:14:25
NEW YORK (AP) — A California entrepreneur who sought to merge the bitcoin culture with social media by letting people bet on the future reputation of celebrities and influencers has been arrested on a fraud charge.
Nader Al-Naji, 32, was arrested in Los Angeles on Saturday on a wire fraud charge filed against him in New York, and civil claims were brought against him by federal regulatory authorities on Tuesday.
He appeared in federal court on Monday in Los Angeles and was released on bail.
Authorities said Al-Naji lied to investors who poured hundreds of millions of dollars into his BitClout venture. They say he promised the money would only be spent on the business but instead steered millions of dollars to himself, his family and some of his company’s workers.
A lawyer for Al-Naji did not respond to an email seeking comment.
The Securities and Exchange Commission said in a civil complaint filed in Manhattan federal court that Al-Naji began designing BitClout in 2019 as a social media platform with an interface that promised to be a “new type of social network that mixes speculation and social media.”
The BitClout platform invited investors to monetize their social media profile and to invest in the profiles of others through “Creator Coins” whose value was “tied to the reputation of an individual” or their “standing in society,” the commission said.
It said each platform user was able to generate a coin by creating a profile while BitClout preloaded profiles for the “top 15,000 influencers from Twitter” onto the platform and had coins “minted” or created for them.
If any of the designated influencers joined the platform and claimed their profiles, they could receive a percentage of the coins associated with their profiles, the SEC said.
In promotional materials, BitClout said its coins were “a new type of asset class that is tied to the reputation of an individual, rather than to a company or commodity,” the regulator said.
“Thus, people who believe in someone’s potential can buy their coin and succeed with them financially when that person realizes their potential,” BitClout said in its promotional materials, according to the Securities and Exchange Commission.
From late 2020 through March 2021, Al-Naji solicited investments to fund BitClout’s development from venture capital funds and other prominent investors in the crypto-asset community, the commission said.
It said he told prospective investors that BitClout was a decentralized project with “no company behind it … just coins and code” and adopted the pseudonym “Diamondhands” to hide his leadership and control of the operation.
The Securities and Exchange Commission said he told one prospective investor: “My impression is that even being ‘fake’ decentralized generally confuses regulators and deters them from going after you.”
In all, BitClout generated $257 million for its treasury wallet from investors without registering, as required, with the Securities and Exchange Commission, the agency said.
Meanwhile, it said, BitClout spent “significant sums of investor funds on expenses that were entirely unrelated to the development of the BitClout platform” even though it had promised investors that would not happen.
The Securities and Exchange Commission said Al-Naji used investor funds to pay his own living expenses, including renting a six-bedroom Beverly Hills mansion, and he gave extravagant gifts of cash of at least $1 million each to his wife and his mother, along with funding personal investments in other crypto asset projects.
It said Al-Naji also transferred investor funds to BitClout developers, programmers, and promoters, contrary to his public statements that he wouldn’t use investor proceeds to compensate himself or members of BitClout’s development team.
veryGood! (22138)
Related
- Sydney Sweeney Slams Women Empowerment in the Industry as Being Fake
- Key Tool in EU Clean Energy Boom Will Only Work in U.S. in Local Contexts
- Fracking the Everglades? Many Floridians Recoil as House Approves Bill
- SoCal Gas Knew Aliso Canyon Wells Were Deteriorating a Year Before Leak
- Traveling to Las Vegas? Here Are the Best Black Friday Hotel Deals
- For stomach pain and other IBS symptoms, new apps can bring relief
- It's a bleak 'Day of the Girl' because of the pandemic. But no one's giving up hope
- Damaris Phillips Shares the Kitchen Essential She’ll Never Stop Buying and Her Kentucky Derby Must-Haves
- Tom Brady Shares How He's Preparing for Son Jack to Be a Stud
- Trump EPA Appoints Former Oil Executive to Head Its South-Central Region
Ranking
- Fire crews gain greater control over destructive Southern California wildfire
- Conservatives' standoff with McCarthy brings House to a halt for second day
- Dead raccoon, racially hateful message left for Oregon mayor, Black city council member
- Kamala Harris on Climate Change: Where the Candidate Stands
- Seattle man faces 5 assault charges in random sidewalk stabbings
- Miami's Little Haiti joins global effort to end cervical cancer
- I always avoided family duties. Then my dad had a fall and everything changed
- Personalities don't usually change quickly but they may have during the pandemic
Recommendation
-
John Krasinski Revealed as People's Sexiest Man Alive 2024
-
Vanderpump Rules’ Tom Sandoval Reveals He’s One Month Sober
-
Leaking Well Temporarily Plugged as New Questions Arise About SoCal Gas’ Actions
-
Sea Level Rise Damaging More U.S. Bases, Former Top Military Brass Warn
-
'Wheel of Fortune' contestant makes viral mistake: 'Treat yourself a round of sausage'
-
Rollercoasters, Snapchat and Remembering Anna NicoIe Smith: Inside Dannielynn Birkhead's Normal World
-
Every Must-See Moment From King Charles III and Queen Camilla’s Coronation
-
With Order to Keep Gas in Leaking Facility, Regulators Anger Porter Ranch Residents