Embezzlement Scandal Rocks Canadian Cryptocurrency Exchange ezBtc
The founder of now-defunct Canadian cryptocurrency exchange ezBtc has been found guilty of embezzling user funds. The exchange, which operated from 2016 to 2019, reportedly used customer funds for illicit purposes.
Gambling with Customer Funds: The Shocking Revelation
The British Columbia Securities Commission (BCSC) conducted an investigation that uncovered disturbing findings about ezBtc. The exchange’s founder, David Smillie, was found to have diverted user funds to gambling platforms CloudBet and FortuneJack, totaling 13 million Canadian dollars.
The investigation revealed that a significant amount of Bitcoin and Ethereum from the exchange’s account was transferred to Smillie’s personal trading account, and in some instances, directly to the gambling sites. This misappropriation represented about one-third of the total user assets on the platform.
According to the BCSC, the flow of Bitcoin from ezBtc to Smillie’s accounts mirrored the movement of funds to the gambling platforms, indicating a deliberate misuse of customer funds for personal gain.
Devastating Consequences for Customers
As a result of Smillie’s actions, numerous customers were left unable to withdraw their funds from the exchange. Some customers had deposited large amounts of Bitcoin, only to be met with false promises of high returns that never materialized.
Despite repeated attempts by customers to retrieve their locked funds, Smillie provided false assurances and eventually ceased all communication with them in 2019. The BCSC’s investigation was initiated in response to multiple complaints and lawsuits filed by aggrieved users.
The regulator concluded that Smillie’s deceptive practices led to actual financial losses for customers who were unable to access their funds. Sanctions and restrictions are expected to be imposed on Smillie in the near future.
History Repeats: Parallel Cases of Cryptocurrency Exchange Failures
The scandal involving ezBtc is not an isolated incident in the Canadian cryptocurrency market. Other exchanges, such as QuadrigaCX and Einstein, have also faced similar fates, resulting in losses for their customers.
QuadrigaCX collapsed in 2018 following the sudden death of co-founder Gerald Cotton, who allegedly took crucial wallet information to the grave. The search is ongoing for another co-founder, Michael Patryn, in connection with the case.
Similarly, the Einstein cryptocurrency exchange shut down in 2019 due to an inability to repay customers, amidst allegations of fraudulent practices and operating as a Ponzi scheme. Michael Ongun Gokturk, the exchange’s head, has been accused of deceitful conduct despite the platform’s bankruptcy.
These recurring incidents highlight the ongoing challenges and risks faced by investors in the cryptocurrency space, underscoring the importance of regulatory oversight and due diligence.
The founder of Canadian cryptocurrency exchange ezBtc criticized for gambling user funds
