Prosecutors are not done with fraud perpetrated by crypto entrepreneurs, announcing yesterday the arrest and charging of Nader Al-Naji, who unveiled the dubious project BitClout back in 2021.

Why it matters: The allegations mostly focus on traditional fraud — lying to investors, and misappropriating funds. The crypto part is secondary.

Catch up quick: In 2021, Al-Naji — using the pseudonym of "Diamondhands" — created BitClout, a crypto project for making digital tokens out of the Twitter (now X) likeness of celebrities and other users.

• The project was controversial within the crypto community because it minted tokens for prominent influencers without their permission.
• Eventually, BitClout's underpinnings were recycled into DeSo, a similar crypto-based social network project.

Zoom in: According to the complaints from the DOJ and SEC, Al-Naji made false statements to at least one investor, getting them to invest $3 million into the project.

• BitClout raised more than $200 million in total — $7 million in a seed round and the balance via ICO
• He subsequently used investor funds not only to pay developers (contrary to his statements to investors), but also for the "rental of a six-bedroom mansion in Beverly Hills and personal credit card payments; fund extravagant gifts of cash (of at least $1 million each) to his wife ... and his mother ... [to] transfer funds to accounts in the names of his wholly-owned entities ... and to fund personal investments in other crypto asset projects."

Moreover, he allegedly tried to work around the SEC's framework for establishing whether something is a security by portraying BitClout has being developed by a decentralized group, without a central company.

• He also allegedly obtained a letter from a prominent law firm that concluded, based on his misrepresentation of the project, that it was unlikely to be deemed a security and promoted the letter to investors.

Zoom out: Al-Naji's list of blue chip VCs included Sequoia Capital, a16z, Winklevoss Capital, and Digital Currency Group, largely because of his existing relationships.

• He previously founded Basis, another crypto company, which folded in 2018 over concerns it was breaking securities laws. He returned the leftover funding, earning himself some goodwill.
• I reached out the above investors, in addition to Pantera Capital, Long Journey, and Coinbase Ventures and got no response.

Between the lines: One crypto industry insider — while emphasizing that the allegations are serious worthy of prosecution — argued to me that it's a convenient case especially for the SEC to hold up as further reason to be hostile to the industry.

Yes, but: That's a convenient argument to make in a political battle with a regulator.

The bottom line: Crypto may want more regulatory clarity, but its continued issues with traditional fraud won't help regulators get on board.

Tenable (Nasdaq: TENB), a Columbia, Md.-based cybersecurity firm, is exploring options including a sale, per Bloomberg.

Why it's the BFD: The recent Crowdstrike debacle has put even more focus on cybersecurity companies amid an ongoing industry consolidation.

Zoom in: The company has received some takeover interest and could have talks with private equity firms or strategic acquirers, per Bloomberg.

• Tenable had net loss of almost $48 million on revenue of $826 million for the fiscal year ended March 31.
• Its share price rose 14% on Tuesday, and closed up 9.3% to $47.15, giving Tenable a market value of about $5.6 billion.

The bottom line: "A possible sale of Tenable would come as the cybersecurity market moves toward consolidation, according to Damian Reimertz, a senior associate analyst for Bloomberg Intelligence. Of the top three vulnerability-management competitors, Tenable was alone in gaining share from 2019 to 2023 — at the expense of Qualys Inc. and Rapid7 Inc., Reimertz said." — Ryan Gould, Liana Baker, Bloomberg

🚑 AIRNA, a Cambridge, Mass., RNA editing therapeutics company, raised $60m in additional Series A funding led by Forbion, with Ono Venture Investment, Alexandria Venture Investments, ARCH Venture Partners and ND Capital also participating. airna.com

• Rhombus, a Sacramento, Calif., physical security startup, raised $45m in Series C funding led by NightDragon, with Bluestone Equity Partners, Caden Capital, Cota Capital, Tru Arrow Partners, and Uncorrelated Ventures also participating. rhombus.com

🌎 Graphyte, a Dover, Del., carbon removal startup, raised $30m in Series A funding led by Prelude Ventures and Carbon Direct Capital, with Breakthrough Energy Ventures and Overture also participating. graphyte.com

• Perchwell, an N.Y. residential real estate data startup, raised $25m in Series B funding led by Lux Capital, with Starwood Capital Group, Flex Capital, Stellar MLS, REcolorado MLS, and California Regional MLS also participating. perchwell.com

• Haus, an SF marketing attribution startup, raised $20m in funding led by 01 Advisors, with Baseline Ventures, Haystack Ventures, Octave, Mantis Venture Capital, and Insight Partners also participating. haus.io

• Intelmatix, a Saudi logistics startup, raised $20m in Series A funding led by Shorooq Partners, with Saudi Venture Capital Company, Saudi Technology Ventures, and Olayan Financing Company also participating. axios.link/3YrWovM

• Lineaje, a Saratoga, Calif., supply chain cybersecurity startup, raised $20m in Series A funding led by Prosperity7 Ventures, Neotribe Ventures, and Hitachi, with Tenable Ventures, Carahsoft Technology, Wipro Ventures, SecureOctane, and Alumni Ventures Group also participating. axios.link/3YqvUuz

🚑 Montara Therapeutics, an SF brain therapeutics company, raised $8m in seed funding led by SV Health Investors' Dementia Discovery Fund and Two Bear Capital, with Dolby Family Ventures and KdT Ventures also participating. montaratx.com

• Batbox, a Dallas baseball simulation and bar venue chain, raised $7.3m in Series A funding from Emerging Fund, MG Partners, and others. axios.link/3Sw940u

🚑 Noze, a Canadian breathalizer diagnostics startup, raised $5m in initial Series A funding from the Gates Foundation. axios.link/4dssmMF

• FranShares, a Chicago franchise investing company, raised $4.1m in seed funding led by Chicago Ventures. franshares.com

• Streamkap, an SF data streaming startup, raised $3.3m in seed funding led by InReach Ventures, with TEN13, Haatch Ventures, Begin Capital and angel investors also participating. streamkap.com

• Not Diamond, an SF maker of AI developer tools, raised $2.3m in funding led by defy.vc, with Jeff Dean, Julien Chaumond, Zack Kass, Ion Stoica, Tom Preston-Werner, Scott Belsky, Jeff Weiner, and others also participating. notdiamond.ai

• American Industrial Partners acquired the Sulfuric Acid Regeneration Business of Veolia North America, a French water, waste, and energy resource management company for $620m. It's been renamed Nexpera. nexperasolutions.com.

• AXA IM Prime agreed to acquire a 20% stake in Rivage Investment, a French European infrastructure direct lending and French public sector financing firm. axios.link/3WKk1hE

• Sunland Asphalt, backed by Huron Capital, acquired Georgia Paving, an Atlanta asphalt and paving maintenance company. georgiapaving.com

• SD Worx agreed to acquire F2A, an Italian HR and payroll company, from Ardian. sdworx.com

• Unity Partners invested in Katsam Property Services, a St. Louis facility maintenance services business. katsam.com

• AEI CapForce II Investment, a SPAC targeting "new economy" sectors in the Southeast Asia and APAC regions, filed for an IPO again. axios.link/3WvmL10

🚑 Voyager Acquisition, a SPAC targeting the healthcare sector, lowered its proposed deal size by 16% to $220m. haxios.link/46uQJH8

• Airtable has acqui-hired Dopt, an Oakland, Calif., user onboarding startup. axios.link/3WpY5Hq

• Koito Manufacturing agreed to acquire Cepton (Nasdaq: CPTN), a San Jose, Calif. high performance lidar company, for $3.17 a share in cash. https://axios.link/4c6nwDp

• Pendo acquired Zelta AI, an N.Y. customer feedback analytics startup. pendo.io

• Summer acquired Vault, an Austin, Texas-based student loan repayment company. axios.link/3WKHQ9e

• Hidden Harbor Capital Partners, a Boca Raton, Fla., private equity firm, raised $800m for its third fund. hh-cp.com

• Moxxie Ventures, an SF seed-stage venture firm, raised $95m for its third fund. axios.link/3YpQEST

• R136 Ventures, a Woodside, Calif., mid- to late- stage venture firm, hired Tom Dennedy as partner and chief operating officer. He previously held the same roles at ​​Artiman Ventures. r136.vc

• XYZ Venture Capital, an SF venture firm, raised $200m for an early-stage fund and $125m for an opportunity fund. It also hired Camille Ricketts as partner and head of marketing, and Art Clarke as partner. axios.link/3ygE8e1

• Alex Cook is leaving Tiger Global, where he led fintech deals as a partner, per TechCrunch. axios.link/4dnxe5E

• Initialized Capital, an SF venture firm, promoted Livingston Miller to chief operating officer. He will also remain general counsel. initialized.com

• T.Rowe Price hired Tony Rodriguez as vice president in private equity. He was previously a vice president at FT Partners. troweprice.com

Decentralized Social (or DeSo) is the current project of Nader Al-Naji. It's a custom built blockchain made for running a social network.

The latest: The value of its coin tanked yesterday, falling about 30%, on the news of the charges, reports my colleague Brady Dale.

• In a press release from April, the company behind it said that it had 130,000 active users, and 2 million accounts.

Zoom out: The blockchain world is both obsessed with X, formerly Twitter (yes, it still is) and dying to usurp it with something less centralized, but none of its efforts to date (see also: Lens, Nostr, Farcaster, Hive and others) have hit escape velocity yet.