Gairika Mitra
ezBtc, a Canadian crypto trading platform, has been involved in a major scandal after it was discovered to have misappropriated more than $9.5 million in user funds, the majority of which is in Bitcoin and some in Ether.
The British Columbia Securities Commission (BCSC) revealed that ezBtc founder David Smillie had been diverting these assets. The assets were used on several online gaming sites and various personal accounts between 2016 and 2019.
Smillie had told customers that they could buy and sell various crypto assets, but their assets would be kept in “cold storage.” He shared that cold storage is a more secure form of keeping digital assets offline, sans any cyber threats and unauthorized access.
The BCSC panel noted, “Customers were unable to recover all of their assets. The deceit led to actual loss.”
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The analytics firm discovered that 935.46 bitcoins and 159 ethers were “quickly transferred” to either Smillie’s personal accounts or two gambling websites.
The panel found Smillie guilty of keeping custody of all customer assets and even diverting them, which could lead to several financial consequences, according to the panel.
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Similar cases of fraud have happened in the past with QuadrigaCX in Canada, Mt. Gox in Japan, BitGrail in Italy, and Coincheck in Japan in the last couple of years. These incidents call for strict regulatory oversight in the crypto space.
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GAIRIKA
Gairika is a cryptocurrency journalist with a focus on Bitcoin and blockchain technology.
