By Mark Hunter
2 weeks agoWed Jul 31 2024 09:06:15
Reading Time: 2 minutes
- Nader Al-Naji has been arrested for fraud involving a $3 million token buy
- Al-Naji has misappropriated the investment funds after deceiving the investor
- BitClout falsely marketed itself as a decentralized trading and social app
Nader Al-Naji, the founder and promoter of the BitClout cryptocurrency , has been arrested on charges of fraud over a $3 million token buy. According to US Attorney Damian Williams, Al-Naji misappropriated a $3 million investment after lying to the investor to obtain the funds. BitClout marketed itself as a decentralized protocol without any centralized issuer, promoting itself as “a cross between a financial app and a social app,” when it was nothing of the sort.
“False Promises and Half-truths”
The arrest was announced by Williams alongside Christie Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), yesterday, with Al-Naji having been taken into custody on Saturday, July 27, 2024. He was presented before a US Magistrate Judge in California the following day.
In the announcement, Williams summarized the allegations, noting that Al-Naji’s alleged fraud was “nothing new,” alleging that he “lied to get access to millions of dollars, then gave the money away to family and friends.” Curtis echoed these sentiments, noting that Al-Naji “misappropriated investments in the protocol for personal expenses and gifts” and used “false promises and half-truths to exploit well-intended investors of their funds.”
BitClout marketed itself as a decentralized protocol without any centralized issuer, promoting itself as “a cross between a financial app and a social app,” functioning as a social media and cryptocurrency trading platform that allowed users to purchase BitClout tokens using Bitcoin .
$3 Million Investment Misappropriated
In January 2021, Al-Naji approached a prospective investor, referred to as “Investor-1,” with marketing materials for BitClout. During a meeting on January 18, 2021, Al-Naji asserted that the Bitcoin raised from selling BitClout tokens would be used to develop the BitClout protocol. He claimed that his role was merely to purchase BitClout tokens and that he had no control over the funds post-purchase.
Contrary to these claims, Al-Naji allegedly maintained control over the funds provided by Investor-1 and used them for personal expenses and gifts to his family members. It is alleged that after securing an investment of approximately $3 million from Investor-1, Al-Naji routed the funds through multiple accounts for his and his family’s benefit.
Al-Naji, 32, of Los Angeles, California, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.
