SAN FRANCISCO — A federal jury on Monday convicted the co-founder of a San Francisco-based cryptocurrency trading fund of defrauding more than 20 investors out of nearly $1 million, authorities said.
Japheth Dillman, 48, of San Francisco, was found guilty on one count each of wire fraud and conspiracy to commit wire fraud, the U.S. Attorney’s Office said in a news release. The verdict followed a 10-day trial.
Evidence presented at the trial showed Dillman and a co-conspirator raised funds from investors by misleading them about the capabilities and profitability of Block Bits Capital, authorities said.
From June 2017 to August 2018, Dillman and others raised money from investors by claiming the fund would profit from automated cryptocurrency trading by using a software tool called the “Autotrader.”
Authorities said Dillman knew that the tool did not work, and investor funds were not and could not be used as promised.
Dillman and his coconspirator used the funds to pay themselves and to make risky and speculative investments in other cryptocurrency ventures, authorities said, citing other evidence presented at the trial.
The investments actually resulted in big losses, and Dillman falsely told investors that Block Bits cryptocurrency trading had led to significant profits, authorities said.
Dillman is free on bond and faces up to 20 years in prison and a $250,000 fine when he is sentenced Dec. 8.
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