ezBtc’s Smillie Found Guilty of $9.5M in Customer Fund Fraud

• BCSC finds David Smillie and ezBtc guilty of misusing $13M CAD in customer crypto assets for gambling and personal use.
• Over 2,300 Bitcoin and 600 Ether, falsely claimed to be in cold storage, were diverted by ezBtc for high-risk activities.
• While ezBtc falsely promised secure crypto storage, assets were used for online gambling.

The British Columbia Securities Commission (BCSC) today concluded that David Smillie, alongside his company, ezBtc, committed fraud, misappropriating approximately $13 million CAD ($9.5 million USD) in customer cryptocurrency assets. These assets were reportedly used for personal and gambling expenses.

How Much Was Stolen by ezBtc?

The panel findings detailed a misappropriation of over 2,300 Bitcoin and more than 600 Ether between 2016 and 2019, under the guise of security and reliable storage. These digital assets, worth millions, were diverted from their supposed secure cold storage to various online gambling platforms and personal accounts managed by Smillie.

What Did ezBtc Claim to Offer Its Customers?

During its operational years, ezBtc had assured its clients that their crypto assets were safely secured in cold storage. However, investigations revealed that these claims were false, with substantial amounts of Bitcoin and Ether being actively used for high-risk activities, including online gambling.

What Are the Consequences for David Smillie?

The BCSC’s decision highlights significant fraudulent activities, leading to Smillie facing possible sanctions by September 24, 2024. These sanctions could range from hefty fines to complete bans on market participation, aiming to address the severity of the regulatory breaches and the financial losses inflicted on investors.

The deceit practiced by Smillie and his company led to actual losses for numerous customers, who were unable to withdraw their digital assets. The proceedings underline the emotional and financial distress caused, eroding trust in the security of cryptocurrency platforms.

Crypto Adoption in Canada: A Broader Look

While the ezBtc case unfolds, overall cryptocurrency adoption in Canada remains stagnant. Despite the global rise in digital currency usage, only 3% of Canadians utilize cryptocurrencies for daily transactions. This slow adoption rate highlights a continued preference for traditional banking methods among the population.

Despite the challenges seen in the crypto industry, not all news is disheartening. In a positive turn for the Canadian cryptocurrency market, 3iQ Digital Asset Management recently announced plans to launch North America’s first Solana exchange-traded product (ETP), signaling continued innovation and growth in the sector.