SEC Revises Binance Complaint, Charges BitClout Founder with Fraud

On July 30th, the U.S. Securities and Exchange Commission made two significant regulatory moves in the crypto space. Firstly, the SEC plans to amend its complaint against Binance, which could affect token classifications, and second, it charged the founder of BitClout with fraud.

What's the scoop?

• Per a new court filing, the SEC wants to amend its complaint against Binance, potentially dropping charges related to third-party tokens like Solana (SOL) and Polygon (MATIC). Notably, this move might avoid a court ruling on whether these tokens are securities.
• The SEC had previously named ADA, ALGO, ATOM, AXS, COTI, FIL, MATIC, SAND, and SOL as unregistered securities in its case against Binance. This development follows a July 9th hearing where the judge clarified that her ruling did not intend to exclude third-party tokens from the case.
• Legal experts suggest the SEC's decision to amend its complaint is a strategic move to streamline the case rather than a shift in policy. The SEC still considers these tokens securities in other cases.
• Today the SEC also charged BitClout founder Nader Al-Naji with fraud and unregistered offering of securities.
• Al-Naji, who raised over $250 million from selling BitClout’s native token, BTCLT, allegedly misled investors about the project’s decentralization and misused $7 million of investor funds for personal expenses.
• According to the Commission, Al-Naji used a pseudonym, "Diamondhands," to create the illusion of BitClout’s decentralization. They allege he also sought legal opinions to evade regulatory scrutiny, further misleading investors about the nature of BitClout.

Bankless take:

While the amendment to the Binance complaint might streamline the case, it underscores the ongoing regulatory battles in crypto and the need for clear guidelines. Meanwhile, the BitClout case serves as a cautionary tale about the importance of transparency and honesty in crypto projects.