The British Columbia Securities Commission (BCSC) has uncovered a $13 million fraud perpetrated by the cryptocurrency trading platform ezBtc and its founder, David Smillie. The panel’s investigation revealed that a significant portion of the crypto assets entrusted to the platform by customers between 2016 and 2019 was misappropriated for personal gain and gambling activities.
According to the BCSC, ezBtc, a company incorporated by then-B.C. resident David Smillie, falsely assured customers that their bitcoins would be held securely in “cold storage”—a method designed to keep digital assets offline and safe from cyber threats. However, the reality was starkly different. The commission’s findings indicate that approximately one-third of the crypto assets deposited by customers were siphoned off to gambling websites and Smillie’s personal accounts on other crypto trading platforms.
In a statement issued on Monday, the commission disclosed that it had engaged a forensic data analytics firm to trace the flow of the misappropriated funds. The investigation revealed that some of the cryptocurrency was “quickly transferred” to Smillie’s accounts or funneled into gambling sites, further exposing the extent of the deception.
The BCSC panel’s findings pointed directly to Smillie as the architect behind the fraudulent activities. By directing the operations of ezBtc and authorizing its misconduct, Smillie was found to have committed the same violations as the platform itself. This ruling underscores the commission’s determination to hold individuals accountable for corporate malfeasance.
“The panel found that Mr. Smillie directed the affairs of ezBtc, and by authorizing the company’s misconduct, he committed the same misconduct as the platform,” the BCSC stated.
The commission also revealed that ezBtc was dissolved in 2022, and neither the company nor Smillie participated in the hearing. Although Smillie was absent from the proceedings, he was represented by legal counsel.
As the BCSC prepares to determine the appropriate sanctions, Smillie faces the possibility of significant penalties. These could include hefty fines or bans from participating in the financial markets. The commission’s forthcoming decision will likely set a precedent for how such cases are handled in the burgeoning cryptocurrency industry, where regulation and enforcement remain critical to protecting investors.
This case serves as a stark reminder of the risks associated with unregulated crypto platforms and the importance of due diligence by investors in the volatile world of digital assets. The BCSC’s findings highlight the need for stricter oversight and regulation to prevent similar frauds in the future.
The B.C. Securities Commission has uncovered a $13 million fraud by crypto platform ezBtc and its founder, David Smillie. Learn about the shocking misappropriation of funds and the potential penalties ahead.
