Canadian Crypto Exchange ezBtc Founder Guilty in $9.5 Million Fraud
Canadian exchange ezBtc and its founder, David Smillie, have been found guilty of defrauding investors of over $9.5 million. The British Columbia Securities Commission (BCSC), a provincial regulator in Canada, brought together a panel to investigate ezBtc’s operations.
Key points:
- Approximately 13 million Canadian dollars ($9.5 million) were misappropriated.
- Over 2,300 Bitcoin and 600 Ethereum were collected from investors.
- 935.46 Bitcoin and 159 Ethereum were diverted for personal use and gambling.
- The platform went offline in 2019 and was dissolved in 2022.
The panel’s findings paint a troubling picture of mismanagement that left thousands of investors unable to access their funds.
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ezBTC acted as a secure platform between 2016-19
ezBtc operated between 2016 and 2019, where it presented itself as a secure platform for crypto trading and storage. The exchange even claimed to utilize cold storage for all user assets. However, the reality was far different from these assurances.
The BCSC panel discovered that Smillie had systematically diverted nearly one-third of users’ funds for personal expenses and gambling activities. This misappropriation involved transferring assets to personal exchange accounts and online gambling websites such as CloudBet and FortuneJack.
“We find that in aggregate, 935.46 Bitcoin and 159 Ether were transferred by ezBtc to Smillie’s exchange accounts and/or to CloudBet and FortuneJack,” the panel stated.
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The panel noted that these transfers were sometimes made directly from ezBtc. However, in other instances, they were routed through Smillie’s personal accounts before reaching the gambling platforms.
The platform abruptly went offline in September 2019 and the users were unable to withdraw their investments. The BCSC panel is set to impose sanctions by September 24, which could include monetary penalties and market participation bans.
