Founder of ezBtc Misappropriated User Funds for Gambling

The Canadian cryptocurrency platform ezBtc and its founder, David Smillie, misappropriated approximately 13 million CAD (~$9.5 million) of client funds, using part of it for gambling. This was reported by the British Columbia Securities Commission (BCSC).

The company, which ceased operations in September 2019 and was liquidated in 2022, claimed to store all user investments in cold storage. However, the BCSC found evidence of illegal appropriation of assets “for personal purposes.”

According to the investigation, from 2016 to 2019, ezBtc accumulated approximately 2300 BTC and 600 ETH. The regulator reported that Smillie redirected nearly a third of user funds to gambling and personal needs:

“A total of 935.46 BTC and 159 ETH were transferred from ezBtc to Smillie’s exchange accounts and [gambling platforms] CloudBet and FortuneJack. Transactions to the two gambling sites were sometimes made directly from ezBtc, and sometimes indirectly from ezBtc through Smillie’s account, and then to the gambling sites.”

The commission also noted that the “deception” by ezBtc “resulted in real losses,” as clients were unable to withdraw assets.

Sanctions against those involved in the scheme will be imposed by September 24. They may include financial penalties or a ban on market activities. Smillie and ezBtc representatives did not attend the hearing in person, but the company’s founder was represented by a lawyer.

Earlier, a case was filed in a Kyiv court regarding a criminal group of 10 people who attracted funds under the guise of cryptocurrency investments.

As reported, the US Securities and Exchange Commission accused NovaTech of orchestrating a $650 million Ponzi scheme.