The United States Department of Justice has indicted 44-year-old Japheth Dillman, the founder of Block Bits Fund, for misleading investors into committing a total of $960,000 to a false arbitrage autotrader.Block Bits Fund was founded in 2017 during the ICO era. The company presented itself as a fund dedicated to cryptocurrencies, Initial Coin Offerings , and blockchain technology.
Prosecutors alleged that Dillman lied to investors in June 2017 that the autotrader was already in operation, generating substantial profits for Block Bits. However, there was no working autotrader at the time, and claims about the profit were false.In August 2017, Dillman emailed investors that the arbitrage autotrader was being tested and would be launched a week later, but again, the information provided was false.
Both partners are charged with one count of wire fraud in two separate documents. If convicted after their next court appearance, they would face a maximum sentence of 20 years in prison, a fine of $250,000, and three years of supervision after release.Meanwhile, Dillman is not the first to face charges from US prosecutors for operating a fraudulent crypto scheme.