Canadian crypto exchange ezBtc gambled on user’s $9.5M

The Canadian crypto exchange, ezBtc has reportedly gambled away $9.5 million – approximately 13 million Canadian dollars – of user funds from the exchange wallet. By this means, the founder of ezBtc, David Smillie has been accused of defrauding customers by misusing their funds.

The news comes forward after the panel from the British Columbia Securities Commission (BCSC), a provincial regulator in Canada, inquired the ezBtc for misappropriating customer funds. The regulatory body claimed that the exchange used user’s funds for their own purposes and gambled away millions of dollars. 

ezBtc exchange went offline permanently in September 2019 and was dissolved in 2022. At the time, they had claimed to store all its users’ crypto funds in cold storage.

Between 2016 and 2019, ezBtc amassed over 2,300 Bitcoin (BTC) and 600 Ether (ETH) from crypto investors when the exchange was functional. According to the BCSC panel’s inquiry, Smillie accessed nearly one-third of total funds for gambling and personal use. 

“We find that in aggregate, 935.46 Bitcoin and 159 Ether were transferred by ezBtc to Smillie’s exchange accounts and/or to CloudBet and FortuneJack.” said BCSC, adding “The transfers to the two gambling websites were sometimes direct from ezBtc, and sometimes indirect from ezBtc to Smillie’s exchange accounts and then to the gambling websites.”

The BCSC further noted that the “deceit of funds” orchestrated by Smillie and ezBtc “led to actual loss” as customers were unable to withdraw their assets.

According to the court filing, sanctions will be imposed by Sept. 24 and they could include monetary sanctions to bans on market participation for Smillie. At the hearing, ezBtc representatives were not present personally but the founder was represented by a lawyer.

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