Controversial Crypto Project BitClout Faces Legal Charges Over Selling Social Tokens Without Users Consent

BitClout, a controversial blockchain-based social network that lets users speculate on each other, has landed in hot water after being served with a legal notice from crypto law firm Anderson Kill P.C.

What Happened: The law firm sent a cease and desist letter to BitClout’s founder Nader Al-Naji, on behalf of Brandon Curtis, for using Curtis’s private information without his consent.

“Adopting Bitcoin's aesthetic to raise VC funding to carry out unethical and blatantly illegal schemes like BitClout: not cool,” tweeted Curtis, who heads the product team at decentralized exchange Radar Relay.

Why It Matters: BitClout offers users the opportunity to purchase tokens tied to the identity of certain individuals on their platform, regardless of whether those individuals have consented to their details being shared.

See also: Best Cryptocurrency

According to the project’s whitepaper, profiles of 15,000 influencers were “pre-loaded” into the BitClout platform, and users would be able to trade on those tokenized accounts by acquiring BitClout’s BTCLT token. However, BTCLT can only be paid for using BTC, and once users put their money in, there is no way to swap it back.

Bitclout has the most well-architected growth hack I've ever seen.

People with large followings will login and see they have thousands of unclaimed dollars and the only way to claim it is by tweeting a Bitclout link out. pic.twitter.com/iW3edLuogx

— Nikita Bier (@nikitabier) March 23, 2021

Popular crypto traders and influencers were quick to call BitClout a scam when it first appeared, however, the project has managed to attract investment from several major venture capital firms.

“Basically, every major VC is in this project. Coinbase, Sequoia, a16z, Social Capital, DCG, Pantera, Huobi, Winklevoss Capital, Alex Ohanian, North Island Ventures,” said The Block’s news director of news Frank Chaparro.

The official legal notice now alleges that BitClout violated Section 3344 and Section 1798 of California’s Civil Code – the former relating to an individual’s right to profit from the commercial value of his or her own identity, and the latter relating to individual’s right to privacy in the state.

“The right of publicity means an individual should be able to decide how they profit from the commercial value of their likeness and what organizations they collaborate with,” said Anderson Kill partner Hailey Lennon in the letter.