David Smillie, the founder of Canadian crypto exchange ezBtc, has been accused of misappropriating around 13 million Canadian dollars ($9.5 million) of user investments for gambling.
This accusation derives from an investigation conducted by the British Columbia Securities Commission (BCSC), a regulator in the Canadian province of British Columbia.
EzBtc had assured users that their crypto investments were securely stored in cold storage. However, the reality was different. The platform, operational from 2016 to 2019, collected over 2,300 Bitcoin and more than 600 Ether from its investors.
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The BCSC found that nearly one-third of these funds were redirected by Smillie for gambling and personal use. The court filing states:
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. 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.
As a result, customers were unable to access or withdraw their funds, leading to significant financial losses.
Legal actions and potential sanctions against Smillie and ezBtc are expected to be finalized by September 24, possibly including financial penalties and market participation bans.
This case highlights the risks involved in crypto investments and the importance of regulatory oversight to protect investors from fraud.
In other news, in May, Cypher's developer publicly admitted to gambling away over $300,000 from the protocol's redemption contract.
