The United States Department of Justice (DOJ) has indicted Japheth Dillman, 44, founder of the Block Bits Fund, for misleading investors into committing a total of $ 960,000 to a fake arbitrage autotrader.
DOJ Indicts Block Bits Founder
Block Bits Fund was founded in 2017 during the ICO era. The company is a dedicated fund for cryptocurrencies, Initial Coin Offering (ICO), and blockchain technology. This promises investors a high return of profits that are expected to be made by using the price difference between digital currencies on different crypto exchanges.
According to indictmentDillman, alongside partner David Mata, 42, allegedly misrepresented the level and capabilities of Block Bits by falsifying company records.
Prosecutors say Dillman lied to investors in June 2017 that the autotrader was operating, generating substantial profits for Block Bits. However, no autotrader was working at the time, and claims about the profits were false.
Block Bits Investors Lose Over $ 500,000
In August 2017, Dillman sent an email to investors that the arbitrage autotrader was being tested and would be launched next week, but again, the information provided was false.
The complaint further alleges that the partner falsified records about investor fund management. Dillman and Mata told investors that the funds were placed in cold storage for safekeeping for higher yields. However, the funds were invested and lost in risky cryptocurrency projects that had nothing to do with cold storage. The lawsuit also alleges that Block Bits investors lost approximately $ 508,000 to the scheme.
Both partners were charged with one count of wire fraud in two separate documents. If convicted after the next trial, he will face a maximum sentence of 20 years in prison, a $ 250,000 fine, and three years of probation upon release.
Not the First
Meanwhile, Dillman is not the first to face charges from U.S. prosecutors for operating a fake crypto scheme.
CryptoPotato reported in February the DOJ officially indicted one of BitConnect’s founders on fraud charges in connection with a Ponzi scheme that drained nearly $ 2.4 billion from investors in 2018.
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