A federal jury is convicting a cryptocurrency trading fund founder of defrauding investors by falsely claiming his fund used a working proprietary autotrader for automated crypto trading.
The U.S. Attorney’s Office for the Northern District of California says the scheme involved raising nearly $1 million from more than 20 investors between June 2017 and August 2018 for Block Bits Capital.
Japheth Dillman, 48, of San Francisco, faced the charges after a 10-day trial before U.S. District Judge Richard Seeborg.
The U.S. Attorney’s Office says Dillman and his associates raised money from investors by claiming the fund would profit from automated cryptocurrency trading by using a software tool called the “Autotrader” that the firm had developed and was complete and working.
“In fact, Dillman knew that this automated algorithm was not working and investor funds were not and could not be used as Dillman had promised,” the U.S. Attorney’s Office stated.
Evidence showed investor funds were instead used to pay Dillman and others while funding risky speculative investments in other crypto ventures that produced major losses.
The U.S. Attorney’s Office says Dillman falsely told investors that Block Bits cryptocurrency trading had led to significant profits when in fact the trading led to more losses of investor funds.
Dillman remains released on bond with sentencing set for December 8, 2026, at 9:30 a.m. before Judge Seeborg.
Dillman was convicted of wire fraud and conspiracy to commit wire fraud. Each count carries a maximum penalty of 20 years in prison and a $250,000 fine.
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