British Columbia Crypto Trading Firm Accused of $13 Million Fraud
Date: 2024-08-13 Author: Alex Crawford Categories: CRYPT
The British Columbia Securities Commission (BCSC), an independent government body that regulates investment markets in the province, has revealed details of its investigation into cryptocurrency trading platform ezBtc. According to the commission, the company, founded by David Smillie, a former British Columbia resident, was found to have misused about one-third of its clients’ assets, amounting to approximately $13 million.
The commission alleges that ezBtc misled its clients by telling them that their funds would be in “cold storage,” a method considered safer because it involves storing assets on offline devices. However, the investigation found that a significant portion of these funds were transferred to Smillie’s personal accounts on other crypto platforms and to two gambling sites. However, the exact amounts used for gambling, as well as the names of these sites, were not disclosed by the commission.
Between 2016 and 2019, ezBtc allegedly sent about one-third of all customer deposits to Smillie’s personal needs. The commission also stated that this fraud caused real damage, since customers were never able to get all of their funds back. Interestingly, Smillie was absent from the recent hearing, but he was represented by a lawyer. ezBtc was liquidated in 2022.
The commission’s next step will be to consider possible fines and sanctions against Smillie and the ezBtc platform. These could range from monetary fines to bans from participating in investment markets.
In order to establish what happened to customer assets, the BCSC turned to forensic data analytics experts for help. The analysis found that of the 2,300 bitcoins and 600 ethers that ezBtc managed, 935.46 bitcoins and 159 ethers were quickly transferred to Smillie’s personal accounts or used for gambling. In one case, a customer deposited bitcoins into ezBtc, and less than half an hour later, the same funds were transferred to a gambling site.
Ultimately, the commission’s investigation concluded that Smillie was the one directing ezBtc’s actions and likely giving orders to transfer client funds. The commission also alleges that he was aware that ezBtc was embezzling client assets, making him and the platform liable for the actions taken.
