Another Forbes 30 Under 30 Alumnus Faces Legal Trouble
The Forbes 30 Under 30 list, often celebrated for highlighting promising young talent across various industries, has recently come under scrutiny as several honorees face significant legal troubles. These young entrepreneurs and innovators, once lauded for their groundbreaking achievements, are now in the spotlight for all the wrong reasons.
The prestigious list has yet another alumnus that is facing regulatory kerfuffle. Nader Al-Naji, the founder of BitClout, has been charged by U.S. Securities and Exchange Commission (SEC) with wire fraud and the sale of unregistered securities.
According to court documents, Al-Naji raised approximately $257 million from the sale of BitClout’s native token, BTCLT. However, instead of using the funds for the platform and its employees as promised, Al-Naji allegedly spent over $7 million on personal expenses, including renting a mansion in Beverly Hills and giving extravagant cash gifts to family members.
“As alleged in our complaint, Al-Naji attempted to evade the federal securities laws and defraud the investing public, mistakenly believing that ‘being “fake” decentralized generally confuses regulators and deters them from going after you,’” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, in a press release. “He is obviously wrong: as we have shown time and again, and as reflected in the SEC’s detailed allegations here, we are guided by economic realities, not cosmetic labels. The dedicated staff of the SEC uncovered Al-Naji’s lies and will now hold him accountable for misleading investors.”
The SEC also accused Al-Naji of making BitClout appear as a decentralized project with “no company behind it… just coins and code,” further complicating the regulatory landscape. He used the pseudonym “Diamondhands” to reinforce this image.
Al-Naji has been charged with one count of wire fraud, carrying a maximum sentence of 20 years in prison if convicted.
Forbes’ Hall of Shame
In light of the growing number of legal troubles among its honorees, Forbes has introduced a list to acknowledge the “most dubious people” to have made their annual 30 Under 30 list. This list was created to own up to past mistakes and includes the following individuals:
- Sam Bankman-Fried, recognized in the 2021 Forbes 30 Under 30 for finance, is the founder of the cryptocurrency exchange FTX. Bankman-Fried faces multiple charges, including wire fraud, securities fraud, and money laundering. The charges stem from allegations that he misused billions of dollars in customer funds to support his trading firm, Alameda Research.
- Charlie Javice, listed in the 2020 Forbes 30 Under 30 for finance, is the founder of Frank, a financial aid startup. Javice was charged with securities fraud by the SEC for allegedly misrepresenting the number of users on her platform to secure a $175 million acquisition deal with JPMorgan Chase. According to the SEC, Javice fabricated data and lied about Frank’s metrics to inflate its valuation.
- Caroline Ellison, the Co-CEO of Alameda Research and listed in the 2022 Forbes 30 Under 30 for finance, pleaded guilty to wire fraud and conspiracy for moving billions from FTX customers to cover losses at Alameda. She was a key witness at the trial that found Bankman-Fried guilty of all charges.
- Nate Paul, Founder of World Class Capital Group and listed in the 2016 Forbes 30 Under 30 for finance, was charged with eight counts of lying to lenders and later indicted on four additional counts of fraud and conspiracy. Paul pleaded not guilty and is set to face trial.
- Martin Shkreli is the Founder of MSMB Capital and listed in the 2013 Forbes 30 Under 30 for finance. Shkreli, infamously known as “Pharma Bro,” was convicted of securities fraud. He became widely despised for raising the price of the life-saving drug Daraprim from $17.50 to $750 per tablet.
- Cody Wilson, Founder of Defense Distributed and listed in the 2014 Forbes 30 Under 30 for law and policy, pleaded guilty to injury to a child after paying to have sex with a 16-year-old girl. He is now a registered sex offender.
- James O’Keefe, the founder of Project Veritas and listed in the 2012 Forbes 30 Under 30 for media, was ousted from his company following complaints about his leadership style and misuse of donor funds. He is also under investigation by the Westchester County District Attorney’s Office.
- Phadria Prendergast is the Editor-in-Chief of Women Of The City Magazine and was listed in the 2023 Forbes 30 Under 30 for Europe, media, and marketing. Prendergast was found to have run a pay-for-play scam, defrauding customers of roughly $195,000. She is also suspected of having ties to the alleged cult Salvation Proclaimers Anointed Church, or SPAC Nation.
- Steph Korey, Co-founder of Away and listed in the 2016 Forbes 30 Under 30 for retail and e-commerce, was accused of bullying coworkers and enforcing a grueling workload, leading to her departure from the company. She faced further backlash after criticizing the media industry on social media.
- Lucas Duplan, Founder of Clinkle and listed in the 2014 Forbes 30 Under 30 for finance, saw his career decline rapidly after failing to deliver a product despite raising $30 million from investors. By the end of 2015, he had significantly downsized the company.
While Al-Naji’s case is one of the most recent and high-profile, he is not the only Forbes 30 Under 30 honoree facing legal issues. Trevor Milton, honored in the 2016 Forbes 30 Under 30 for manufacturing and industry, is the founder of Nikola Corporation, an electric vehicle startup. Milton was charged with securities fraud for allegedly misleading investors about the company’s technology and production capabilities. The SEC claims Milton exaggerated the readiness of Nikola’s hydrogen fuel cell technology, leading to inflated stock prices.
Manish Lachwani, included in the 2021 Forbes 30 Under 30 for enterprise technology, is the co-founder of HeadSpin, a software testing company. Lachwani was charged with securities fraud for allegedly overstating the company’s revenue figures to secure over $60 million in investments. The SEC’s complaint details how Lachwani fabricated financial statements to deceive investors.
In a 2021 interview, Al-Naji revealed that BitClout had attracted investments from prominent firms such as Sequoia, Andreessen Horowitz, Social Capital, TQ Ventures, Coinbase Ventures, Winklevoss Capital, Arrington Capital, Polychain, Pantera, Digital Currency Group, Huobi, and Variant, among others.
Information for this story was found via CoinDesk and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
