US DOJ Indicts Block Bits Fund Founder In a $960,000 Crypto Ponzi Scheme

Block Bits Fund Founder 44-year-old Japheth Dillman is charged by the United States Department of Justice (DOJ) for deceiving investors into committing a false arbitrage Autotrader of a total of $960,000.

DOJ Alleges Block Bits Founder And His Partner In Crypto Fraud

Block Bits Fund was launched during the era of ICOs in 2017. The company claims itself to be a fund that caters to blockchain technology, cryptocurrencies, and Initial Coin Offerings (ICOs).

The Fund affirmed users of the high returns produced through the leveraging price discrepancies between crypto-assets on different crypto exchanges.

As per the allegations, Dillman and David Mata, his partner aged 42, together misstated the level and capability of Block Bits showing false company records.

According to the indictment, Dillman told a lie to investors in June 2017, saying that the Autotrader was already working, earning Block Bits substantial profits. But, contrary to the claims, no Autotrader was working at the time, and no profit was being generated.

Over $500,000 Of Block Bits Investors Lost

Then, again in August 2017, Dilman again propagated false information through emails, stating that the test of arbitrage Autotrader was in process and its launch was planned a week later.

Further, the complaint states that the partners counterfeited records about the management of investors’ funds. The partners told investors that funds are kept in cold storage for protection to produce higher yields. While in contrast, the funds were invested and vanished in risky digital asset projects with no connections with cold storage whatsoever.

Around $508,000 of Block Bits investors were lost to the scheme, according to the indictment.

Both Dillman and Mata are alleged of one count of wire fraud in two different documents. The partners will face a sentence of a maximum of 20 years in prison, will be kept under supervision after release, and a fine of $250,000, in case they are convicted after their next appearance in court.

Also Read: Major Investors See Bright Future For Cryptocurrency

A Ponzi Scheme That Drained $2.4 billion

However, this is not the first time that someone is facing charges from US prosecutors in a case of running a fraudulent crypto scheme.

As per the February report of CryptoPotato, the DOJ charged one of BitConnect’s founders with a Ponzi scheme to which investors lost nearly $2.4 billion.