The British Columbia Securities Commission (BCSC) has revealed a significant case of fraud involving a cryptocurrency trading platform and its owner, amounting to $13 million in misappropriated assets. The commission’s panel found that the platform, operating under the name ezbtc, and its founder, David Smillie, had engaged in deceptive practices, misleading customers about the safety of their investments and diverting substantial funds to personal accounts and gambling sites.
The BCSC’s investigation focused on the claims made by ezbtc, which assured customers that their Bitcoin deposits would be stored securely in “cold storage”—a method intended to keep digital assets offline and safe from potential cyber threats. However, the commission’s findings paint a starkly different picture. Between 2016 and 2019, approximately one-third of all cryptocurrency assets deposited by customers were siphoned off to unauthorized destinations.
The commission detailed that a significant portion of the misappropriated funds was transferred either to Smillie’s personal accounts on other cryptocurrency trading platforms or directly to gambling websites. This diversion of assets not only violated the trust of ezbtc’s customers but also breached the platform’s promises regarding the safety and security of their investments.
To uncover the full extent of the fraud, the BCSC enlisted the expertise of a forensic data analytics firm. Their investigation traced the flow of the stolen cryptocurrency, revealing that the assets were rapidly moved to Smillie’s accounts and gambling sites. The commission’s panel concluded that Smillie had exercised direct control over ezbtc’s operations and, by authorizing the company’s misconduct, he effectively committed the same violations as the platform itself.
The findings have raised serious concerns about the integrity of cryptocurrency trading platforms and the need for stricter regulatory oversight to protect investors from similar fraudulent schemes. The BCSC’s exposure of this fraud underscores the vulnerabilities within the rapidly evolving digital asset market and the importance of transparency and accountability among cryptocurrency operators.
The B.C. Securities Commission is expected to take further action against Smillie and ezbtc, with potential penalties and sanctions that could serve as a deterrent to others in the industry. This case highlights the ongoing challenges regulators face in safeguarding the interests of investors in the complex and often opaque world of cryptocurrency trading.
The British Columbia Securities Commission uncovers a $13 million cryptocurrency fraud by ezbtc founder David Smillie, revealing the misappropriation of customer assets to personal accounts and gambling sites.
