The US Department of Justice has charged the founder of the Block Bits Fund with a $1M scheme. The DOJ says that the 44-year old Japheth Dillman was involved in a crypto scheme that defrauded $960,000 from investors.
Department of Justice indicts Block Bits founder
The DoJ has said that Dillman misled investors into investing $960,000 in a false scheme. The investors lost funds from the arbitrage autotrader platform that was falsely misrepresented.
The Block Bits Fund was launched in 2017, at a time when Initial Coin Offerings (ICOs) were increasingly popular. The fund was represented as focusing primarily on cryptocurrencies, ICOs and blockchain technology.
The fund promised investors that they would receive high returns from their investments. The returns would be derived from the profit generated by taking advantage of the price difference between cryptocurrencies on different exchanges.
The indictment says that Dillman and his associate, David Mata, falsified the company records to lure investors into investing in the fund. Dillman was also accused of lying to investors in June 2017 that autotrader was in operation when it was not. He also lied to investors about the profits made.
Dillman lied to investors
In August 2017, Dillman sent an email to investors announcing a testing phase for autotrader, saying that the feature would be launched after a week. However, this email was also false.
It is also alleged that the duo falsified records on how the investor funds were being used. The two told investors that the funds were being stored in cold wallets to create a chance of enjoying higher returns.
However, Dillman and Mata had invested the funds in risky projects where they lost most of the funds. Because of the duo’s forgery and risky investment options, around $508,000 was lost during the scheme.
Dillman and Mata are being charged with wire fraud. The two face a sentence of up to 20 years in prison. If they are not convicted, they will be fined $250,000 and face a three-year supervision period after they are released.
The DOJ has been vigilant in filing charges against fraudulent cryptocurrency projects. In February this year, the DoJ indicted one of the founders of BitConnect over fraud charges. BitConnect is linked to a Ponzi scheme where almost $2.4 billion was lost by investors. Satish Kumbhani, the founder of BitConnect, is currently at large.
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