In September 2019, ezBtc was forever taken offline, and it was officially dissolved by 2022.
The Canadian cryptocurrency trading platform ezBtc and its creator, David Smillie, are accused of betting away approximately 13 million Canadian dollars ($9.5 million) in user funds.
A commission from the British Columbia Securities Commission (BCSC), a provincial regulator, has determined that ezBtc diverted customer investments for personal use, including gambling.
Between 2016 and 2019, ezBtc attracted substantial investments, accumulating over 2,300 Bitcoin and over 600 Ether from its users.
The platform declared that all user funds were securely stored in cold storage. Nevertheless, ezBtc was permanently inactive in September 2019, and it was officially dissolved by 2022.
Smillie had diverted nearly one-third of user funds for personal spending and wagering, according to the BCSC panel’s investigation.
Transfers from ezBtc to Smillie’s exchange accounts or directly to online wagering platforms like CloudBet and FortuneJack included 935.46 Bitcoin and 159 Ether.
The panel emphasized that these transfers were occasionally executed directly from ezBtc accounts and, in other instances, were directed through Smillie’s personal exchange accounts.
Smillie and ezBtc’s “deceit” resulted in “actual loss” for consumers, as they were unable to retrieve their assets, the panel further observed.
The scandal occurs in the midst of a period of stagnant cryptocurrency adoption in Canada, where only 3% of the population utilizes digital currencies such as Bitcoin for daily transactions.
Many Canadians continue to favor traditional payment methods, such as cash, cards, and e-transfers, despite the increasing global interest in cryptocurrencies. This preference is primarily due to a reluctance to give up currency-based transactions.
The Canadian Securities Administrators implemented new regulations last year that required crypto firms to make commitments to safeguard investors through “an enhanced pre-registration undertaking.”
Firms are required to adhere to segregation in crypto custody and maintain a chief compliance officer on staff in accordance with the CSA’s “pre registration undertakings.”
Additionally, they must prohibit users from trading or holding stablecoins and eliminate leveraged trading.
Nevertheless, not all exchanges have departed the country, as a few are still dedicated to thriving in a regulated Canadian market.
Coinbase has appointed a former executive from Shopify as its new country director in Canada, as previously reported, as part of its strategy to adapt to the changing regulatory landscape in the country.
In the interim, the Canadian Anti-Fraud Centre (CAFC) issued a warning earlier this year regarding an increase in crypto schemes that were directed at Canadian citizens.
The Canadian Investment Regulatory Organization (CIRO) and the CAFC have issued a warning to increase awareness of these sophisticated schemes, particularly those that involve protracted online communication, in response to this concerning trend.
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