Canadian cryptocurrency trading platform ezBtc is accused of misappropriating $9.5 million in customer cryptocurrency for personal use, mainly gambling.
Canada ’s British Columbia Securities Commission (BCSC) has just announced the conclusion of an investigation showing that cryptocurrency trading platform ezBtc and its founder David Smillie illegally misappropriated about 13 million Canadian dollars (equivalent to 9.5 million USD) of customer funds. The money is said to have been used for personal purposes, mainly online gambling.
According to BCSC, ezBtc operated from 2016 to 2019, attracting more than 2,300 Bitcoins and over 600 Ethers from investors. The platform claimed to store all of its customers' cryptocurrencies in Cold Storage, but investigations revealed that nearly a third of the funds, equivalent to 935.46 Bitcoins and 159 Ethers, were transferred by Smillie to his personal accounts and online gambling sites CloudBet and FortuneJack.
The BCSC investigation panel asserted that the fraudulent conduct of Smillie and ezBtc caused losses to customers, who were unable to withdraw their assets when the platform ceased operations in 2019 and was dissolved in 2022.
The incident once again raises the alarm about the risks in the nascent cryptocurrency market, especially in Canada, where the adoption rate of cryptocurrencies is still very low. According to statistics, only 3% of the Canadian population uses Bitcoin or other cryptocurrencies for daily transactions. Canadians still prefer traditional payment methods such as cash, cards and especially e-transfers.
The ezBtc incident is likely to reinforce Canadians’ risk aversion to cryptocurrencies, contributing to the slow adoption of the technology in the North American country. Sanctions against Smillie and ezBtc are expected to be announced by September 24, and could include fines and market bans.
