(Vancouver) A British Columbia Securities Commission panel has found that a cryptocurrency trading platform and its owner lied to customers and diverted about $13 million in assets to gambling and personal accounts.
The commission says the company operating as ezBtc and formed by David Smillie, then a British Columbia resident, told customers their bitcoins would be held in “cold storage,” a more secure method of keeping digital assets offline.
Instead, the panel found that around a third of all crypto assets that customers deposited on the platform between 2016 and 2019 were diverted to gambling sites or to Mr Smillie’s personal accounts on other cryptocurrency trading platforms.
The commission said in a statement Monday that it hired a forensic data analysis firm to determine what happened to the cryptocurrency, and that some of it was “quickly transferred” either to Mr. Smillie’s accounts or to two gambling sites.
The panel concluded that Mr Smillie was in charge of ezBtc’s affairs and that by enabling the company’s misconduct, he had committed the same misconduct as the platform.
The commission says the company was dissolved in 2022 and did not participate in the hearing, and that although Mr Smillie did not attend, he was represented by a lawyer.
The panel will consider what sanctions to impose, which could be monetary or bans on participation in the market.