Block Bits Capital Founder Convicted in Crypto Fraud Scheme

A federal jury in San Francisco has convicted Japheth Dillman, the 48-year-old co-founder of the cryptocurrency trading fund Block Bits Capital, of wire fraud and conspiracy to commit wire fraud. The verdict, announced by the U.S. Department of Justice on August 24, 2026, follows a 10-day trial and centers on a scheme that defrauded more than 20 investors of nearly $1 million. Prosecutors presented evidence that between June 2017 and August 2018, Dillman and a co-conspirator, David Mata, raised approximately $960,000 by promoting Block Bits Fund I, LP. They told investors the fund used a proprietary automated trading tool called the "Autotrader" to generate profits through arbitrage across multiple cryptocurrency exchanges. However, trial evidence showed the algorithm never worked as represented. The software was never completed or deployed, and actual trading was conducted manually on a single exchange account. Instead of using investor capital for the promised automated strategy, Dillman and Mata diverted the funds.