Japheth Dillman convicted of defrauding crypto investors with fake trading bot

A federal jury in San Francisco has convicted Japheth Dillman, co-founder of Block Bits Capital, of wire fraud and conspiracy. Between 2017 and 2018, Dillman defrauded over 20 investors of nearly $1 million by falsely claiming the fund used a working automated trading bot called the Autotrader. Instead, Dillman and co-founder David Mata diverted funds for personal use and risky bets, resulting in over $500,000 in losses. Dillman faces up to 20 years in prison per count at his December 8, 2026 sentencing.

Block Bits Capital fraud conviction

• ▪The federal trial of Japheth Dillman lasted 10 days and was presided over by U.S. District Judge Richard Seeborg in the Northern District of California.
• ▪Prior to his conviction, Japheth Dillman spent over three decades in the gaming industry and co-founded the game industry accelerator YetiZen in 2010.
• ▪Japheth Dillman defrauded more than 20 investors of approximately $960,000 through the Block Bits Capital cryptocurrency trading fund between June 2017 and August 2018.
• ▪A federal jury in San Francisco convicted Block Bits Capital co-founder Japheth Dillman of wire fraud and conspiracy to commit wire fraud on August 24, 2026.

Non-functional Autotrader trading bot

• ▪The Autotrader software was never operational, and Block Bits Capital instead conducted asset trading manually while only funding early development work on the bot.
• ▪The U.S. Securities and Exchange Commission filed a civil complaint in April 2022 alleging that Japheth Dillman falsely claimed the unfinished Autotrader system could conduct arbitrage across multiple cryptocurrency exchanges.
• ▪Japheth Dillman falsely told investors that Block Bits Capital used a completed, functioning proprietary algorithmic software tool called the Autotrader to generate returns.

Misuse of investor funds

• ▪Japheth Dillman and his co-conspirator diverted Block Bits Capital investor funds to pay themselves and make speculative, undisclosed investments in other cryptocurrency ventures.
• ▪Block Bits Capital investor funds were funneled into high-risk ventures, including loans and the AML Bitcoin initial coin offering, resulting in estimated investor losses of $508,000.
• ▪Japheth Dillman falsely told Block Bits Capital investors that the fund's cryptocurrency trading operations were generating significant profits when they were actually suffering major losses.

Co-conspirator testimony

• ▪Japheth Dillman faces a maximum statutory penalty of 20 years in federal prison for each count of wire fraud and conspiracy to commit wire fraud.
• ▪David Mata testified against Japheth Dillman during the August 2026 federal trial and previously settled civil charges with the U.S. Securities and Exchange Commission.

Maximum prison sentence

• ▪Japheth Dillman faces a maximum fine of up to $250,000 for each count of conviction, with the final fine to be determined under federal sentencing guidelines.
• ▪U.S. District Judge Richard Seeborg scheduled the sentencing hearing for Japheth Dillman on December 8, 2026, in San Francisco.