San Francisco-based gaming founder convicted of operating fraudulent crypto trading fund

A U.S. federal jury convicted a 48-year-old San Francisco resident, Japheth Dillman, of wire fraud and conspiracy to commit wire fraud in connection with a fraudulent crypto trading fund, the Department of Justice announced Monday.

Dillman allegedly defrauded more than 20 investors of nearly $1 million by making false statements about Block Bits Capital, the trading fund he helped establish, the DOJ said in a statement. 

According to court documents and evidence, Dillman and a co-conspirator misled investors about the capabilities and profitability of the fund. Between June 2017 and August 2018, the two mainly claimed that the fund was using an automated crypto trading tool called the "Autotrader" that the firm had developed. Dillman knew that the automated algorithm did not work.

Dillman and the co-conspirator allegedly used investor funds to pay themselves and make risky investments in other crypto ventures that resulted in significant losses. Dillman hid the risky nature of these investments from investors and told them the fund was making huge profits.

According to his LinkedIn profile, Dillman spent over three decades in the gaming industry, producing, directing, and advising games and studios. In 2010, he co-founded game industry accelerator YetiZen.

Dillman faces a maximum penalty of 20 years and a $250,000 fine for each count of conviction, the DOJ noted. He is currently released on bond, and his sentencing is scheduled for Dec. 8.