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FollowingA U.S. federal jury convicts cryptocurrency fund founder of fraud
A federal jury in San Francisco has found the founder of a cryptocurrency exchange fund guilty of wire fraud and conspiracy, the U.S. Department of Justice announced on Monday. Prosecution evidence showed that the founder sold trading software to investors that he knew would not work properly.
Jeffs Dillman, 48, raised nearly US$1 million from more than 20 investors through the Block Bits Capital fund between June 2017 and August 2018. He promised investors that the fund would use a proprietary tool called Automated Trader to automate cryptocurrency trading and make money, claiming that the tool had been developed and was operating normally.
In fact, the algorithm did not work at all-and prosecutors pointed out that Dillman knew this, which meant that investors 'funds could not be used the way he promised. Instead of using the funds for the promised purposes, he and a co-conspirator who was not mentioned in the announcement, withdrew their own salary and invested the remaining funds in speculative positions in other cryptocurrency projects, while falsely claiming to investors that the funds have been allocated to safer assets.
These speculative transactions suffered heavy losses. Dillman later lied to investors that Block Bits's transaction had generated considerable profits, but actually caused further losses.
Dillman was convicted after a 10-day trial presided over by U.S. District Judge Richard Seberg and remains on bail. He will be sentenced on December 8 and faces up to 20 years in prison and a $250,000 fine for each count. The final sentence will be determined by a judge based on federal sentencing guidelines.
The FBI and the Internal Revenue Service's Criminal Investigation Division jointly conducted the investigation into the case with assistance from the Securities and Exchange Commission's San Francisco office. Assistant U.S. Prosecutors Christian Highsmith and Charles Bissetto are responsible for the prosecution of the case.
According to data from the FBI's Complaint Center, cryptocurrency-related cases accounted for more than half of the fraud and cybercrime losses reported by Americans to law enforcement last year. Among them, investment scams are the largest single category, with the amount involved reaching US$8.6 billion, an increase of 32% compared with 2024.
This figure only covers what victims report to law enforcement. The Consumer Federation of America pointed out that since the vast majority of fraudsters will not submit complaints at all, the actual amount of loss may be several times this figure.
