B.C. security commission found that the crypto trading company ezBtc misused customer funds. Bitcoin ATM in the image.
VANCOUVER – The British Columbia Securities Commission has determined that a cryptocurrency trading platform, ezBtc, along with its owner, David Smillie, misled customers and redirected around $13 million of their assets for personal use and gambling.
The Commission reports that ezBtc, which was incorporated by Smillie when he was living in B.C., assured customers that their bitcoins would be stored in "cold storage," a method considered safer as it keeps digital assets offline. However, the panel discovered that between 2016 and 2019, about one-third of the crypto assets deposited by customers were instead funneled to gambling websites or to Smillie's personal accounts on other cryptocurrency platforms.
On Monday, the Commission revealed in a statement that it had engaged a forensic data analytics firm to trace the movement of the cryptocurrency. The investigation found that some of the assets were swiftly transferred to Smillie's accounts or to two gambling sites.
The panel concluded that Smillie was in control of ezBtc’s operations, and by permitting the company’s wrongdoing, he effectively engaged in the same misconduct as the platform.
The Commission also noted that ezBtc was dissolved in 2022 and did not participate in the hearing. Although Smillie did not attend the hearing, he was represented by a lawyer.
The panel will now deliberate on the appropriate sanctions, which could include financial penalties or prohibitions on market participation.
