The U.S. Securities and Exchange Commission charged BitCloud founder Nader Al-Naji with fraud after the agency said he used investors' funds in part to pay rent on a mansion in Beverly Hills.

Al-Naji, 32, raised more than $257 million from the "unregistered offers and sales" of a native token, called BTCLT, which is on the blockchain-based platform BitClout. Al-Naji allegedly lied to investors about the "decentralized nature of the project," the SEC said in a complaint filed in the U.S. District Court for the Southern District of New York on Tuesday.

The SEC said Al-Naji raised millions from selling BTCLT while dishonestly telling investors the funds would not be used to reimburse himself or BitClout employees. However, Al-Naji spent more than $7 million of investors' funds on personal …