This week, the US FBI arrested a high-profile scammer known as “Diamondhands” who was behind a $257 million crypto scam.
Who is the one hiding under the pseudonym “Diamondhands”?
Nader Al-Naji, better known as “Diamondhands,” was arrested this week by the FBI to answer for his actions in federal court in New York.
Yet nothing predestined him to find himself in such a situation. A graduate of Princeton University, His resume even included a stint at Google as a software engineer.
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In 2018, Nader Al-Naji had already made a foray into the crypto sector by raising $118 million to develop a stablecoin called “Basis”. The latter, based on an algorithm, just like the infamous UST of the Terra blockchain, had a short life because its founder put an end to the initiative only a few months after its creation.
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What is Nader Al-Naji, founder of BitClout, accused of?
Nader Al-Naji founded BitClout in March 2021, a pseudo “decentralized social network” which later took the name “DeSo” for Decentralized Social. Through deception, he managed to obtain an audit from a major American law firm for this protocol..
With the latter in his pocket, he convinced a large number of reputable investors in the crypto sector to invest in his project. Among the big names associated with this fundraising we find Sequoia, Pantera, Polychain Capital, Winklevoss Capital, Coinbase Ventures and many others.
A large-scale fundraising, amounting to 200 million dollars.
But when the BitClout platform was launched, Nader Al-Naji committed a new fraud, encouraging users of the protocol to obtain BTCLT tokens, the platform's token, in exchange for their Bitcoins.. However, they were unaware that they would no longer be able to turn back the clock to recover their BTC.
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In total, the scam is estimated at $257 million, more than half of which came from individual investors. Nader Al-Naji allegedly misused the funds to meet extravagant personal needswhich is not unlike the spending of Sam Bankman-Fried, the founder of FTX.
Nader Al-Naji is therefore accused of several counts, including use of securities not authorized by the United States Securities and Exchange Commission (SEC) and also an accusation of electronic fraud brought by the FBI.
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Sources: SEC Complaint, Crypto fundraising
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Passionate about the blockchain ecosystem, I like to deepen my knowledge and share my discoveries. In a perpetual quest to learn more about cryptos, I recently joined the Cryptoast Research team where I provide weekly fundamental analysis.
Theo Zananiri
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