Block Bits Capital co‑founder convicted of crypto fraud

A Northern District of California jury found Block Bits Capital co‑founder Japheth Dillman guilty of wire fraud and conspiracy for running a cryptocurrency fund that never used the advertised automated trading tool.

False claims about an automated trading bot

Prosecutors said Dillman and a co‑conspirator promoted a program called “Autotrader” as a fully functional system that would automatically trade digital assets. Evidence showed Dillman knew the algorithm was not operational, and the fund’s assets were instead traded manually.

Misuse of investor money

Investor funds were diverted to personal payments and speculative crypto investments that resulted in substantial losses. Despite the losses, Dillman allegedly told investors the fund was generating significant profits.

Legal proceedings and potential penalties

The 48‑year‑old San Francisco resident was tried before U.S. District Judge Richard Seeborg. He faces up to 20 years in prison and a $250,000 fine for each count. Sentencing is scheduled for Dec. 8, and Dillman remains free on bond.

Broader context of crypto investment fraud

This conviction follows several recent federal cases involving alleged crypto investment scams, including charges against a Tennessee resident for a $1.9 million scheme and a guilty plea by the CEO of Goliath Ventures for a $400 million fraud.