Crypto Fund Founder Convicted Over Fake Trading Bot Scam

Japheth Dillman, founder of crypto fund Block Bits Capital, has been convicted of wire fraud and conspiracy by a federal jury in San Francisco. The conviction comes after prosecutors showed that Dillman sold investors on a trading software he knew did not work.

Between June 2017 and August 2018, Dillman raised close to $1 million from over 20 investors for Block Bits Capital. He told them the fund would make money through automated cryptocurrency trading driven by a proprietary tool called the Autotrader, which he claimed was complete and working.

However, prosecutors said that in reality, the algorithm did not function, and Dillman knew it. Instead of using investor money as promised, Dillman and his co-conspirator used it to pay themselves and make speculative bets on other crypto ventures.

The bets lost heavily, but Dillman told investors that Block Bits' trading had produced significant profits. He faces up to 20 years and a $250,000 fine on each count, with sentencing set for December 8.