SEC Dismisses Civil Fraud Case Against Bitclout-Deso Founder

In the first act, the U.S. Securities and Exchange Commission (SEC) folded its civil fraud lawsuit against Deso founder Nader Al-Naji, filing a joint stipulation of dismissal with prejudice in the U.S. District Court for the Southern District of New York on March 12.

Translation for the non-lawyers: the case is finished, closed, and legally buried deep enough that the SEC cannot bring the same claims again.

The lawsuit, originally filed in July 2024, accused Al-Naji of running what regulators described as a multi-million-dollar crypto asset scheme tied to Bitclout, the social-media blockchain project that later rebranded to Deso. The SEC alleged he raised more than $257 million through sales of the BTCLT token while telling investors the funds would support development rather than his personal lifestyle.

Regulators claimed more than $7 million, but it went toward items such as Beverly Hills mansion rent and transfers to relatives. Al-Naji has long rejected those allegations, maintaining that the project operated legitimately and that the blockchain network remains decentralized.

The SEC’s latest filing said the agency reassessed the evidentiary record and the specific facts of the case before deciding to withdraw. Each side agreed to cover its own legal costs, and both Al-Naji and several associated relief defendants — including family members and entities tied to the project — waived potential reimbursement claims against the government.

For those keeping score at home, this marks the second major legal retreat connected to the case. A parallel wire-fraud prosecution brought by federal prosecutors was dismissed without prejudice in February 2025 by a magistrate judge in New York.

Al-Naji, a former Google engineer who once operated under the pseudonym “Diamondhands,” launched Deso in 2021 after shuttering his earlier stablecoin venture Basis. The project attracted heavyweight investors, including Andreessen Horowitz, Sequoia Capital, Coinbase Ventures, and Winklevoss Capital.

The New York Times (NYT) claims nearly 60% of inherited crypto cases—around dozens—have been dropped, paused, or scaled back since U.S. President Trump took office in 2024.

Meanwhile, just down the courthouse hallway in another case tied to crypto’s less glamorous side, a judge delivered a firm legal “not so fast” to investors trying to expand liability in the EminiFX Ponzi scandal.

U.S. District Judge Ronnie Abrams on March 12 dismissed the racketeering claims in a proposed class-action lawsuit stemming from the notorious EminiFX trading scheme run by Eddy Alexandre, a former Seventh-day Adventist pastor and deacon.

Alexandre is already serving a nine-year federal prison sentence after pleading guilty in 2023 to commodities fraud for running the operation, which collected roughly $248 million from tens of thousands of investors between September 2021 and May 2022.

Prosecutors said Alexandre promised investors a mysterious robo-trading system capable of producing at least 5% weekly returns — the kind of pitch that sounds suspiciously like a Vegas slot machine with divine intervention.

Instead, authorities say much of the money was lost or diverted, including millions that landed in Alexandre’s personal accounts and financed purchases such as a $155,000 BMW.

The newer civil lawsuit sought roughly $750 million in damages and attempted to pull church entities and leaders into the case under the federal Racketeer Influenced and Corrupt Organizations Act, arguing that their positions of authority helped promote the scheme to parishioners.

Judge Abrams ruled those RICO claims could not proceed because they were based on alleged securities fraud — something Congress explicitly carved out from civil RICO suits through the Private Securities Litigation Reform Act.

Without the RICO hook, the court lacked nationwide jurisdiction over the defendants, forcing the dismissal of the case as currently structured. Plaintiffs now have 30 days to attempt a revised complaint if they can construct a viable legal theory.

Put together, the two rulings offer a snapshot of crypto litigation in 2026: enforcement cases evolving, courtroom strategies colliding with statutory limits, and judges occasionally reminding everyone that flashy accusations still have to survive the fine print of federal law.

• Why did the SEC drop the case against the Bitclout-Deso founder?
  The agency said it reassessed the evidence and decided to dismiss the civil fraud claims with prejudice, permanently closing the case.
• Does the SEC dismissal mean Nader Al-Naji was cleared of wrongdoing?
  The dismissal ends the civil lawsuit and prevents refiling of the same claims, but it does not constitute a judicial ruling on the allegations.
• What happened in the EminiFX lawsuit against church leaders?
  A federal judge dismissed the racketeering claims because securities-based allegations cannot be used to support civil RICO actions.
• Is the EminiFX civil case completely over?
  Not yet — plaintiffs have 30 days to attempt an amended complaint if they can present a legally valid theory for the claims.

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