ezBtc, a Canadian crypto platform, misappropriated $9.5M in customer funds between 2016-2019, shocking the crypto community.
- Founder David Smillie funneled customer funds into online gambling, directly violating the trust of thousands of investors.
- The British Columbia Securities Commission is set to impose sanctions on Smillie, with penalties expected by September 24.
The Canadian cryptocurrency exchange platform ezBtc has been found guilty of misappropriating approximately 13 million Canadian dollars ($9.5 million) of its customers’ funds.
Operating between 2016 and 2019, the platform attracted significant investments from users, amassing over 2,300 Bitcoin (BTC) and more than 600 Ether (ETH). While ezBtc claimed that all user funds were securely stored in cold storage, an investigation by the British Columbia Securities Commission (BCSC) revealed otherwise.
Funds Funneled Into Personal Expenses
According to the BCSC, nearly one-third of the accumulated assets were misappropriated for personal use by ezBtc’s founder, David Smillie. The funds, including 935.46 Bitcoins and 159 Ethers, were siphoned off and used to finance Smillie’s lavish spending and gambling habits on websites like CloudBet and FortuneJack.
These transactions were made directly from ezBtc’s accounts and, in some cases, were routed through Smillie’s personal exchange accounts before being transferred to the gambling platforms.
The misappropriation left customers unable to withdraw their assets when the platform collapsed in September 2019. The BCSC panel emphasized that this breach of trust led to actual financial losses for the platform’s users, who had relied on ezBtc’s promises of secure storage. The platform officially dissolved in 2022, further cementing the damage done to its investors.
Penalties Awaiting Smillie
The BCSC is now poised to impose sanctions on Smillie, with penalties expected to be decided by September 24. These could range from monetary fines to potential lifetime bans from trading in the market. Despite the gravity of the accusations, Smillie and his representatives were absent from the hearings, though legal counsel was present.
Crypto Adoption Stalls in Canada
This scandal bothers the possibilities of cryptocurrency adoption in Canada in general. Contrary to other countries where the focus was made more on the use of virtual money, specifically Bitcoins and others, only 3% of Canadians use them daily.
Such conservatism is apparent, and Canadians prefer to use ‘’old-fashioned’’ methods such as cash and cards for payments. The ezBtc experience may slow down the rate at which the adoption of cryptocurrencies is embraced in the country even further.
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