Catenaa, Sunday, March 15, 2026- The US Securities and Exchange Commission has dismissed its civil fraud lawsuit against Nader Al-Naji, the creator of the BitClout social media blockchain, according to a filing in federal court in New York.
Court documents submitted Thursday in the US District Court for the Southern District of New York show the agency agreed to dismiss the case with prejudice. The decision permanently bars regulators from bringing the same allegations again against Al-Naji or several associated relief defendants.
The civil lawsuit, first filed in July 2024, accused Al-Naji of misleading investors while raising more than $257 million through sales of the BTCLT token linked to the BitClout network. Regulators alleged that funds collected during the token sale were promoted as dedicated to platform development rather than personal compensation.
The complaint said more than $7 million of those funds were later spent on personal expenses. Investigators cited rent payments for a Beverly Hills residence and cash transfers to family members among the expenditures.
Al-Naji’s wife, mother and several affiliated entities were also named as relief defendants in the case. The court filing indicates both sides agreed to cover their own legal costs as part of the dismissal.
The commission stated that the decision followed a reassessment of the evidentiary record and the specific circumstances surrounding the dispute. Officials also referenced the work of a digital asset policy group created within the SEC during 2025 to examine regulatory approaches to cryptocurrencies.
That task force was launched under acting chairman Mark T. Uyeda to help craft a broader regulatory structure for digital asset markets in the United States.
The settlement agreement also includes a waiver from Al-Naji and related defendants giving up any claims for reimbursement of legal fees or damages against the federal government. The parties further agreed to release any claims tied to the investigation against the SEC and its employees.
The civil dismissal follows an earlier development in a parallel criminal case. Federal prosecutors with the US Department of Justice dropped a wire fraud complaint against Al-Naji in February 2025.
That criminal charge was dismissed without prejudice, meaning prosecutors retain the legal option to refile the case at a later date. No explanation for the decision was publicly disclosed at the time.
Al-Naji later posted on the social media platform X asserting investigators had reviewed extensive personal communications and financial records without finding wrongdoing.
He said the investor cited in the government complaint had remained profitable from their token purchase and did not view themselves as a victim of fraud.
Al-Naji also disputed claims that the BitClout platform lacked decentralization. He argued that a text message cited by investigators was taken out of context and that additional messages clarified the network operated independently.
Before revealing his identity publicly in September 2021, Al-Naji had worked under the pseudonym “Diamondhands” while developing the BitClout network. He later introduced the broader DeSo blockchain as an evolution of the project.
The DeSo ecosystem attracted about $200 million in venture backing from technology investors including Andreessen Horowitz, Sequoia Capital, Coinbase Ventures and Winklevoss Capital.
Al-Naji previously founded the stablecoin startup Basis, which shut down in 2018 after citing regulatory limits. The company returned most of the $133 million it had raised from investors.
The SEC dismissal adds to a growing list of cryptocurrency enforcement actions dropped or settled in recent months. During the past year, regulators have stepped back from cases involving several large crypto firms including Coinbase, Kraken and Ripple Labs.
Those disputes often centered on whether digital tokens should be classified as securities or whether trading platforms needed to register with regulators.
The case against Al-Naji differed from many of those actions because regulators focused on allegations of investor deception rather than questions about token classification.
Industry analysts say the outcome may influence future enforcement strategies as US authorities continue debating how to regulate rapidly expanding blockchain and digital asset markets.
