A B.C. Securities Commission panel found this week that a B.C.-based crypto trading platform committed fraud by lying to its customers and diverting roughly $13 million of their assets to gambling endeavours.
The platform, operating under the name ezBtc and incorporated by former B.C. resident David Smillie, allowed customers to buy and sell various crypto assets.
The company informed customers that their crypto assets were held in “cold storage,” a method of keeping digital assets secure and offline to protect them from cyber attacks.
But the BCSC panel found that about one-third of crypto assets customers deposited with ezBtc between 2016 and 2019 were diverted to gambling sites or to Smillie’s personal accounts.
The BCSC hired a forensic data analytics firm to determine what happened to the 2,300 bitcoins and 600 ethereum that were kept in ezBtc’s custody—supposedly in cold storage.
After some investigating, the firm determined that over 900 bitcoins and more than 150 ethers were transferred to personal accounts and gambling websites.
Smillie did not attend the hearing but was represented by a lawyer. His company dissolved in 2022.
The panel will next consider what sanctions to impose, such as monetary sanctions and bans from market participation.
The BCSC is an independent provincial government agency with an aim to make the investment market benefit the public.
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