Canadian Crypto Exchange ezBtc Guilty of Misappropriating $9.5M

The Canadian cryptocurrency exchange ezBtc has been found guilty by a B.C. Securities Commission panel of misappropriating $9.5 million (CAD $13 million) of customer funds between 2016 and 2019. The funds were diverted to gambling sites and the founder’s personal accounts, deceiving customers who were told their assets were held in cold storage. The platform ceased operations in September 2019, and the company was dissolved in 2022. Sanctions are pending, but criminal charges are not expected for the founder, David Smillie.

Background of the Case

ezBtc, a Canadian cryptocurrency exchange, was established with the promise of securely holding customer funds in cold storage. However, between 2016 and 2019, the exchange misappropriated $9.5 million of these funds. Instead of safeguarding the assets, the funds were diverted to gambling sites and the personal accounts of the founder, David Smillie.

Investigation and Findings

The B.C. Securities Commission conducted a thorough investigation, revealing the extent of the misappropriation. Customers were led to believe their investments were safe, but in reality, the funds were being used for unauthorized purposes. This deception continued until the platform ceased operations in September 2019.

Closure and Dissolution

Following the exposure of these fraudulent activities, ezBtc shut down its operations. The company was officially dissolved in 2022, marking the end of its existence. Despite the severity of the misconduct, criminal charges against the founder, David Smillie, are not anticipated. However, sanctions are still pending and will be determined by the regulatory authorities.