ezBtc, a Canadian-based crypto exchange founded by David Smillie (ezBtc CEO,) has allegedly made away with customers' $9.5 million (about 13 million Canadian dollars). Notably, ezBTC's founder embezzled about one-third of the total customers’ crypto assets invested in the trading platform and shockingly squandered the funds on gambling.
The Canadian regulatory agency, the British Columbia Securities Commission (BCSC,) set up a panel to investigate the allegations. The interrogatory body concluded that ezBtc misappropriated its users' funds for personal purposes, most significantly, for gambling.
Investigational Findings Revealed Funds Mishandling By ezBTC CEO
ezBtc began crypto trading operations in 2016 and thrived for three years. From its inception to mid-2019, ezBtc garnered over 2000 BTC and several hundred ETH in users’ crypto assets. Around mid-2019, the platform went offline, claiming that customers' invested assets were safe in "cold storage." 2022 saw the ezBtc platform shutting down and has remained so to date.
Additionally, investigation findings reveal that significant portions of amassed investor assets moved to David Smillie’s accounts and well-known gambling sites, including CloudBet and FortuneJack. The funds shifted directly from the ezBtc platform to these sites. At other times, the CEO's exchange accounts would receive them before transferring to the gambling platforms. While the token shifts continued, ezBtc users remained stranded as they could not access and withdraw their assets in "cold storage."
Possible Punishments
The August 7 hearing findings emphatically proved that ezBtc and its founder, David Smallie, committed fraud, thus contravening the BCSC 1996 Securities Act. Notably, the CEO was not in attendance, but his lawyer, Cody Reedman, represented him.
Concluding the hearing, the panel set up a timeline for possible sanctions on ezBTC, to be finalized on September 24. For context, these sanctions would entail fines on the platform, an outright ban on market operations, or any consequence deemed fit by the BCSC panel.