Cryptocurrency Fund Founder Convicted of Fraud in U.S.

Japheth Dillman, the founder of a cryptocurrency trading fund, was convicted by a federal jury in San Francisco on charges of wire fraud and conspiracy to commit wire fraud. The conviction follows a 10-day trial before U.S. District Judge Richard Seeborg, during which evidence was presented that Dillman defrauded over 20 investors out of nearly $1 million.

Court documents and trial evidence indicated that Dillman and a co-conspirator misled investors about the capabilities and profitability of Block Bits Capital, a fund they helped establish. From June 2017 to August 2018, they claimed the fund would profit from automated cryptocurrency trading using a software tool called the “Autotrader,” which was purportedly complete and operational. However, Dillman was aware that this algorithm was not functioning as promised, and investor funds were not used as claimed.

Further evidence showed that Dillman and his accomplice used investor money for personal payments and risky investments in other cryptocurrency ventures. These investments resulted in significant losses, yet Dillman falsely reported profits to investors. Currently, Dillman is released on bond, with sentencing scheduled for December 8, 2026. He faces potential penalties of up to 20 years in prison and a fine of $250,000 per count.

The case was prosecuted by U.S. Attorneys Christiaan Highsmith and Charles Bisesto, with investigations conducted by the FBI and IRS Criminal Investigation. The U.S. Securities and Exchange Commission also contributed to the investigation.