Defunct Canadian Crypto Exchange Went Under Due to Founder Gambling Away Assets | Live Bitcoin News

• The Canadian regulator is going after Smillie as the only defendant in this case.
• He misappropriated about one-third of funds entrusted by users on his platform, which amounted to at least 935.46 BTC and 159 ETH.

ezBtc, a crypto exchange operational between 2016 and 2019, was dissolved in 2022 due to customers being unable to withdraw their assets. The British Columbia Securities Commission (BCSC) revealed that the exchange’s founder, David Smillie, gambled away 13 million Canadian Dollars, or 9.5 million US Dollars, causing its liquidity crisis.

The BCSC mentioned in a court filing, “Customers deposited their assets with ezBtc so they could trade in crypto assets using the ezBtc platform. Their assets were not meant to be used for any other purpose. Diverting customers’ assets to Smillie’s Exchange Accounts or gambling sites while representing to customers that their assets were safely held by ezBtc in cold storage was deceitful and a prohibited act.”

Customers Lost At Least 2,300 BTC and 600 ETH

ezBTC, during its functioning, saw users depositing over 2,300 BTC and 600 ETH with a promise of safeguarding their funds in cold storage. However, Smillie used the assets for personal purposes, transferring them to accounts on other exchanges and routing them to gambling platforms CloudBet and FortuneJack.

Per the agency, he misappropriated about one-third of funds entrusted by users on his platform, which amounted to at least 935.46 BTC and 159 ETH. This led to direct losses for users as they could not withdraw their assets. It called his actions illegal. “Diverting customers’ assets to Smillie’s Exchange Accounts or gambling sites while representing to customers that their assets were safely held by ezBtc in cold storage was deceitful and a prohibited act.”

Smillie Acted Alone in Misappropriating User Funds

The Canadian regulator is going after Smillie as the only defendant in this case, as the country’s corporate registry shows him as the incorporator and sole director of ezBtc. The findings suggest that he was the only bad actor involved in the exchange’s operations, controlling user funds completely and acting as its only authorized signatory. He was also the self-represented founder, director, president, and CEO.

Smillie did not attend the court hearing and was represented by his lawyer. The BCSC will impose financial sanctions and market restrictions on him on September 24.