A cryptocurrency trading platform based in British Columbia, Canada, has been accused of defrauding its customers. ezBtc has reportedly diverted 13 million Canadian dollars of customer assets to online gambling sites.
The now-defunct crypto platform, along with founder David Smillie engaged in fraudulent activities between 2016 and 2019, the British Columbia Securities Commission (BCSC) ruled last week.
According to the BCSC, a total of 935.46 Bitcoin and 159 Ether were misappropriated.
The BCSC’s investigation revealed that ezBtc assured customers that their cryptocurrency assets would be securely stored in “cold storage” – a method designed to keep digital assets offline, protecting them from cyber threats and unauthorized access.
However, instead of safeguarding user assets as promised, Smillie transferred the funds into his personal accounts or directly to online gambling platforms such as CloudBet and Fortune Jack.
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Smillie Falsely Assured Customers About Safety Of Funds
The panel’s decision highlights multiple instances where Smillie falsely reassured customers about the security of their assets. “I’ve taken extra precaution to segregate and cold store your coin,” Smillie said in one stance.
He also emphasized his commitment to cold storage in other interactions. Despite assurances, the forensic investigation uncovered that the assets were swiftly redirected to gambling sites.
“The evidence is clear, and we find that both ezBtc and Smillie represented to customers that their crypto assets would be safely held in cold storage. ezBtc did not do so,” the BCSC panel stated in its ruling. The panel further condemned the diversion of customer assets as a deceitful and prohibited act.
David Smillie, who previously worked as a video editor for CTV News, did not participate in the BCSC hearing but was represented by legal counsel. His lawyer argued that the forensic investigation was incomplete and claimed that Smillie should not be held personally responsible.
The panel dismissed these arguments, concluding that Smillie directed ezBtc’s operations and likely orchestrated the transfers of customer assets.
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ezBtc Users Lost All Funds
The investigation was initiated after multiple customers reported difficulties in withdrawing their assets from the platform. Four customers provided testimony before the BCSC panel, detailing their experiences. All of them were unable to recover the full value of their holdings.
One customer testified that they lost 484 Bitcoin, which had a combined value of $823,000 at the time of the fraud, with each Bitcoin worth $1,700. By the time of the hearing, the value of Bitcoin had skyrocketed to $100,000, amplifying the customer’s financial losses and emotional distress.
The customer described the situation as “very stressful,” recounting how the loss occupied his thoughts daily and became even more painful as the value of Bitcoin increased.
Another customer recounted depositing 0.2495 Bitcoin, which he sold for $2,633.18. However, he never received the payment. The forensic investigation later determined that the Bitcoin was transferred to a gambling site just 14 minutes after being deposited on the platform.
A third customer testified about the impact of his financial loss, stating that he had to delay a necessary medical procedure and endured ridicule from family and friends, who questioned his judgment.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
