A federal jury in San Francisco has convicted Japheth Dillman, Founder of cryptocurrency trading fund Block Bits Capital, of wire fraud and conspiracy to commit wire fraud following a 10-day trial before U.S. District Judge Richard Seeborg.
The U.S. Attorney’s Office for the Northern District of California said the jury returned its verdict on August 24, 2026. The Department of Justice (DOJ) release stated that Dillman, 48, defrauded more than 20 investors of nearly $1 million through false statements about the trading fund he helped start.
Dillman remains free on bond, and his sentencing is scheduled for December 8, 2026, before Judge Seeborg.
The Scheme
According to court documents and evidence presented at trial, Dillman and a co-conspirator raised money from more than 20 investors by making false statements about the capabilities and profitability of Block Bits Capital.
Between June 2017 and August 2018, prosecutors said they told investors the fund would generate profits through automated cryptocurrency trading using software called the “Autotrader.”
The DOJ said the evidence presented at trial showed that Dillman knew the algorithm did not function as represented, meaning investor funds could not be deployed through the automated strategy that had been marketed to them.
Prosecutors also alleged that Dillman and his co-conspirator used investor funds to pay themselves and make speculative investments in other cryptocurrency ventures, while investors were told that the fund was generating significant trading profits. Those investments produced losses, according to the prosecution.
The SEC had separately alleged in its 2022 civil complaint that Block Bits Capital promoted an automated cryptocurrency fund using misleading claims about its trading technology. The SEC said the offering raised almost $1 million from more than 20 investors and alleged that the fund had not developed the automated trading system as represented.
From a 2017 Crypto Fund to a 2026 Conviction
The case dates back to 2017. Block Bits Fund I was marketed as a vehicle that would use cryptocurrency arbitrage to generate returns by exploiting price differences for digital assets across exchanges.
When federal authorities brought the criminal case in 2022, prosecutors alleged that Dillman and his co-founder David Mata had raised approximately $960,000 from about 22 investors and that investors had lost approximately $508,000. Those figures were allegations contained in the government’s earlier case materials, rather than a separate finding made by the jury in the 2026 verdict.
The Crypto Times previously reported on the case when the DOJ brought charges against Dillman in April 2022.
The Co-Founder Who Turned Witness
Dillman was originally charged alongside co-founder David Mata. Mata pleaded guilty to wire fraud in June 2022 and later cooperated with the government, including testifying at Dillman’s trial, according to trial reporting.
Dillman’s defense challenged Mata’s credibility and disputed the government’s characterization of his role in the fund. The jury ultimately convicted Dillman on the charges.
Mata also faced a separate SEC civil action. The SEC’s case against Mata resulted in a judgment requiring $75,000 in disgorgement plus prejudgment interest, along with injunctions and an industry bar, according to court records.
Sentencing and the SEC Case
Dillman remains released on bond pending sentencing. Each wire fraud and conspiracy count carries a statutory maximum of 20 years in prison and a $250,000 fine. Those figures represent statutory maximums rather than a prediction of Dillman’s sentence. The actual sentence will be determined by Judge Seeborg after considering applicable federal sentencing requirements.
Running alongside the criminal case is a separate civil enforcement action brought by the Securities and Exchange Commission in April 2022.
The SEC charged Block Bits Capital, Block Bits Capital GP I, Dillman and Mata with fraud and registration violations tied to an alleged unregistered securities offering. The regulator said investors were misled about the fund’s automated cryptocurrency trading strategy and how their money would be used.
The SEC matter is a separate civil proceeding from Dillman’s criminal conviction. The allegations in that case should not be treated as additional criminal convictions.
What the Conviction Establishes
The jury’s verdict establishes that Dillman was found guilty of wire fraud and conspiracy to commit wire fraud. It does not, by itself, resolve every allegation contained in the separate SEC civil case. The case also illustrates the risks surrounding early cryptocurrency investment funds that marketed automated trading technology and high-return strategies during the 2017 ICO-era market.
The DOJ said the prosecution was investigated by the FBI and IRS Criminal Investigation, with assistance from the SEC’s San Francisco office.
Right of Reply: The Crypto Times could not identify publicly available contact details for Dillman, Block Bits Capital, or his counsel before publication.
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