BCSC Uncovers $9.5 Million Misappropriation by ezBtc Founder, Exposing Major Cryptocurrency Fraud

In a shocking revelation, the British Columbia Securities Commission (BCSC) has uncovered a massive financial scandal involving the Canadian cryptocurrency trading platform ezBtc and its founder, David Smillie. The commission's investigation has revealed that Smillie misappropriated millions in customer funds, leading to substantial financial losses for investors.

According to the BCSC, approximately 13 million Canadian dollars ($9.5 million) worth of cryptocurrency investments entrusted to ezBtc were diverted for personal use, including gambling. This deceptive practice was carried out under the guise of securing customers' crypto assets in cold storage, a claim that has now been proven false.

EzBtc, which operated from 2016 until it permanently ceased operations in September 2019 and was dissolved in 2022, accumulated over 2,300 Bitcoin (BTC) and more than 600 Ether (ETH) from investors. However, the BCSC's findings indicate that nearly one-third of these funds were channeled by Smillie into gambling activities, using popular platforms like CloudBet and FortuneJack. The commission's panel reported that 935.46 Bitcoin and 159 Ether were transferred either directly from ezBtc accounts or indirectly through Smillie's personal exchange accounts.

The BCSC has labeled Smillie's actions as deceitful, resulting in real and significant financial losses for customers who found themselves unable to withdraw their assets from the platform. As a consequence, the regulatory body is preparing to impose sanctions on Smillie and ezBtc, which may include hefty fines and possible bans on future market participation. Although Smillie did not personally attend the hearing, he was represented by legal counsel.

This case underscores the ongoing challenges faced by the cryptocurrency industry in Canada, where adoption has remained sluggish. Despite the global rise in digital currencies, only about 3% of Canadians currently use Bitcoin or other cryptocurrencies for everyday transactions. The preference for traditional payment methods like cash, cards, and e-transfers continues to dominate, with many Canadians hesitant to embrace a cashless society.

As the BCSC prepares to enforce penalties, the case serves as a stark reminder of the risks associated with the emerging cryptocurrency market and the importance of regulatory oversight to protect investors.