A U.S. federal jury has convicted Japheth Dillman, a 48-year-old San Francisco resident, of wire fraud and conspiracy to commit wire fraud for his involvement in a fraudulent cryptocurrency trading fund named Block Bits Capital. The Department of Justice (DOJ) stated that Dillman misled investors about the fund’s performance and diverted their funds for personal use and high-risk investments between June 2017 and August 2018.
Dillman, who co-founded Block Bits Capital, is alleged to have falsely claimed the fund utilised an automated trading tool called “Autotrader,” which he knew was non-functional. Investors, numbering over 20, were defrauded of nearly $1 million, with proceeds allegedly siphoned into personal payments and speculative crypto ventures. The case, which concluded on December 8, carries a maximum penalty of 20 years in prison and a $250,000 fine per charge.
The DOJ did not disclose the identity of Dillman’s co-conspirator, who is alleged to have assisted in managing the fund’s fraudulent operations. Details regarding the specific failures of the “Autotrader” algorithm remain unexplained. The conviction underscores ongoing scrutiny of unregulated crypto funds and highlights risks associated with unverified investment vehicles in the digital assets sector.
Written by James Tobias
Bitcoin Desk
