ezBtc allegedly misappropriated the money and used it on online gambling sites
A Canadian cryptocurrency exchange, ezBtc, and its founder, David Smillie, have been accused of misappropriating nearly $10 million of users’ funds and using the money for gambling purposes. The British Columbia Securities Commission (BCSC), a regulatory body in Canada, revealed that the platform defrauded customers by diverting their cryptocurrency investments for personal gain.
ezBtc, which operated from 2016 until it abruptly went offline in September 2019, claimed to store all user investments in secure cold storage. However, the BCSC’s findings indicate otherwise. The platform amassed over 2,300 Bitcoin (BTC) and 600 Ether (ETH) from its users during its operation.
According to the investigation, nearly one-third of these assets, resulting in approximately 935 BTC and 159 ETH, were transferred to Smillie’s accounts. They were then funneled to gambling websites like CloudBet and FortuneJack.
The commission’s panel described these actions as deceitful, stating that they led to significant financial losses for customers who were unable to withdraw their funds. The BCSC emphasized that Smillie’s misappropriation of funds directly contributed to the collapse of ezBtc, leaving users without access to their cryptocurrency holdings.
The BCSC is expected to impose sanctions on Smillie and ezBtc by September 24, 2024. These could include financial penalties and potential bans on market participation. Smillie, who did not attend the hearings, was represented by legal counsel.
The case has raised concerns about the security and reliability of cryptocurrency exchanges, highlighting the risks users face when entrusting their assets to platforms with insufficient regulatory oversight. The scandal has also raised discussions about the need for stricter regulations to protect investors in the rapidly evolving cryptocurrency market.
