Founder Of Cryptocurrency Trading Fund Convicted Of Defrauding Investors

SAN FRANCISCO - A federal jury today convicted Japheth Dillman of wire fraud and conspiracy to commit wire fraud in connection with a scheme to defraud investors in a cryptocurrency trading fund. The jury's verdict follows a 10-day trial before U.S. District Judge Richard Seeborg.

According to court documents and evidence presented at trial, Dillman, 48, of San Francisco, CA, defrauded more than 20 investors out of nearly $1 million through false statements about the trading fund he helped start. At trial, the evidence showed that Dillman and a coconspirator raised funds from investors by misleading them about the capabilities and profitability of Block Bits Capital. From June 2017 to August 2018 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 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 evidence at trial also showed that Dillman and his co-conspirator used investor money to pay themselves and make risky and speculative investments in other cryptocurrency ventures, while lying to investors about the risky nature of these investments. In fact, these investments resulted in huge losses, and Dillman falsely told investors that Block Bits cryptocurrency trading had led to significant profits when if fact the trading led to more losses of investor funds.

Dillman is currently released on bond. Dillman's sentencing hearing is scheduled for December 8, 2026, at 9:30 a.m. before U.S. District Judge Seeborg. Defendant faces a maximum statutory penalty of 20 years and a $250,000 fine for each count of conviction in violation of wire fraud, 18 U.S.C. § 1343, and conspiracy to commit wire fraud, 18 U.S.C. § 1349. Any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorneys Christiaan Highsmith and Charles Bisesto are prosecuting the case with the assistance of Kevin Costello, Lynette Dixon, Andy Ding, and Royce Epperson. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation. The U.S. Attorney's Office appreciates the assistance of the U.S. Securities and Exchange Commission, San Francisco Regional Office.