A shocking revelation has emerged from Canada’s cryptocurrency sector, where the founder of a now-defunct trading platform, ezBtc, was found to have misappropriated millions of dollars in customer funds for personal use and gambling.
The British Columbia Securities Commission (BCSC) has detailed how David Smillie, the man behind ezBtc, diverted around 13 million Canadian dollars (approximately USD 9.5 million) worth of Bitcoin and Ether from customer accounts, leading to significant financial losses for investors.
EzBtc, which operated from 2016 until its abrupt closure in 2019, had assured users that their crypto assets were securely stored in cold wallets.
However, the BCSC’s investigation uncovered a different reality. According to a panel set up by the BCSC, Smillie used nearly one-third of the users’ deposits—935.46 Bitcoin and 159 Ether—for gambling on websites such as CloudBet and FortuneJack, as well as for other personal expenses.
Some of these transactions were made directly from ezBtc accounts, while others were routed through Smillie’s personal exchange accounts before being funnelled into gambling.
The scale of the deceit was substantial. Thousands of ezBtc users were left unable to access their funds when the platform went offline in September 2019, and the company was officially dissolved in 2022.
The BCSC highlighted that this misappropriation led to actual financial losses for customers, who had entrusted the platform with their cryptocurrency holdings, expecting them to be safe.
The repercussions for Smillie are still unfolding, with the BCSC set to impose sanctions by September 24.
These penalties could include hefty fines and possible bans from participating in the financial markets.
Despite the seriousness of the charges, Smillie did not attend the hearings in person, opting instead to be represented by a lawyer.
This case also casts a spotlight on the sluggish pace of cryptocurrency adoption in Canada.
Despite the global surge in digital currency use, only about 3% of Canadians use Bitcoin or other cryptocurrencies for everyday transactions.
Many prefer traditional methods like cash or card payments, with e-transfers being a popular alternative.
This reluctance to embrace digital currencies may be partly fueled by incidents like the ezBtc scandal, which highlight the risks involved in the still-developing crypto space.
