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San Francisco gaming founder convicted in fraudulent crypto trading scheme
The DOJ said the scheme involved nearly $1 million and centered on claims that the fund used a supposed automated tool that did not work.
The Block reports that a U.S. federal jury convicted San Francisco resident Japheth Dillman, 48, of wire fraud and conspiracy to commit wire fraud tied to a fraudulent crypto trading fund called Block Bits Capital.
According to the DOJ, Dillman and a co-conspirator allegedly defrauded more than 20 investors of nearly $1 million by making false statements about the fund’s capabilities and profitability.
The outlet says court documents and evidence indicated the pair misled investors between June 2017 and August 2018, including claims that the fund relied on an automated crypto trading tool named Autotrader that the firm had developed, despite Dillman allegedly knowing the algorithm did not work.
Prosecutors also alleged that investor funds were used to pay themselves and to make risky investments in other crypto ventures that led to significant losses, and that Dillman hid the risky nature of those trades from investors, while telling them the fund was generating huge profits. Dillman faces up to 20 years in prison and a $250,000 fine per count, and sentencing is scheduled for Dec. 8.