US DOJ Charges Block Bits Founder for $1M Crypto Investment Fraud

The 44-year old Japheth Dillman (founder of Block Bits Fund) was indicted by the United States Department of Justice (DOJ). He is accused of misleading investors and committing $960,000 to an arbitrage autotrader.

DOJ Indicts Block Bits founder

Block Bits Fund was established in 2017, during the ICO era. The company claimed to be a fund that was dedicated to cryptocurrencies, Initial Coin Offerings and blockchain technology. Investors were promised high returns due to the profits it allegedly generated by leveraging price discrepancies among digital currencies on different cryptocurrency exchanges.

According to the indictment Dillman and his 42-year-old partner David Mata allegedly misrepresented Block Bits’ capabilities by falsifying company records.

Prosecutors claimed that Dillman told investors that an autotrader was in operation and that Block Bits had made substantial profits in June 2017. Dillman lied to investors in June 2017 that the autotrader was still operational. Also, claims regarding the profit were false.

Block Bits Investors Lose More Than $500,000

Dillman sent investors an email in August 2017 stating that the arbitrage autotrader was under test and would be launched one week later. However, this information was again false.

Further, the complaint claimed that the partners falsified records concerning the management of investors funds. Dillman and Mata claimed that investors were given cold storage to store the funds in order to increase their yields. The funds were lost and invested in risky crypto projects that had nothing to with cold storage. Block Bits investors also lost approximately $508,000 in the scheme, according to the indictment.

Each partner is charged with wire fraud in separate documents. They could face a maximum sentence in prison of 20 years, a $250,000 fine, and three years supervision after they are released if they are convicted.

Not the first

Dillman is not alone to be charged by US prosecutors with operating a fraudulent cryptocurrency scheme.

CryptoPotato reported that in February, the DOJ indicted BitConnect founders on fraud charges related to a Ponzi scheme that took nearly $2.4 billion from investors.

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Marla Brooks

Marla Brooks – Financial Analysis My name is Marla Brooks, and I am the mainstream behind the”observednews.com”  for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.

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