Bitrabo Editorial
The British Columbia Securities Commission (BCSC) discovered that ezBtc, a cryptocurrency exchange, and its founder, David Smillie, were involved in a deceptive scheme that defrauded customers of CAD 13 million in Bitcoin (BTC) and Ether (ETH) between 2016 and 2029, causing actual financial harm to investors.
Deceptive Crypto Savings Program Uncovered
ezBtc, which claimed to offer a unique savings program allowing customers to earn a 9% annual commission, was revealed to be a fraudulent scheme according to the BCSC. David Smillie allegedly diverted approximately CAD 13 million ($9.5 million) in customer assets for personal use.
The exchange, operational since 2016, pretended to store the majority of Bitcoin and Altcoins in secure cold storage, attracting customers to deposit 2,300 BTC and over 600 ETH into their platform, which are now valued at $138 million and $1.62 million respectively.
Smillie was identified as the sole director of ezBtc and was actively involved in customer interactions through various communication channels, known as “the owner” by both customers and staff.
Several complainants noted Smillie’s prominent involvement in their dealings with ezBtc. Testifying customers recounted their challenges with withdrawing their assets from the exchange.
Forensic analysis conducted by Integra revealed that a portion of the crypto funds sent to ezBtc were transferred to online gambling sites and Smillie’s personal accounts on different exchanges. Funds transferred from ezBtc to Smillie’s accounts were further directed to gambling platforms, indicating misuse of customer funds for gambling purposes.
Usage of Customers’ Funds for Gambling
The findings concluded that ezBtc and Smillie engaged in fraudulent activities by diverting almost 936 Bitcoin and 159 Ether for personal gain, violating section 57(b) of the Securities Act. Sanctions against the exchange and its founder are expected to be enforced in the following month.