As an analyst with over two decades of experience in the financial sector, I have seen my fair share of fraudulent activities and deceptive practices. The case of ezBtc is particularly troubling because it involves the misuse of crypto assets, a relatively new and rapidly evolving field that attracts many unsuspecting investors.
According to the British Columbia Securities Commission’s decision, the cryptocurrency platform ezBtc was found guilty of deceiving its clients, channeling approximately $9.4 million towards gambling and personal expenses.
A regulatory body in the Canadian province of British Columbia, specifically the Canada’s British Columbia Securities Commission, has uncovered that a local crypto trading platform named “ezBtc” was involved in deceptive practices towards its clients by providing false information and misappropriating roughly C$13 million (equivalent to over $9.4 million USD) of their funds for gambling purposes.
On August 12th, a statement from the BCSC revealed that the digital platform founded by David Smillie, who was once a resident of British Columbia, misled customers about their cryptocurrency holdings. Instead of being stored in cold storage as promised, it was discovered that approximately one-third of customer deposits or ezBtc acquisitions were actually diverted between 2016 and 2019 to gambling websites or Smillie’s personal accounts on other crypto trading platforms.
As a researcher, I’ve observed that the circumstances surrounding ezBtc left its customers in a position where they couldn’t recoup all their invested assets. The deception unfortunately resulted in real financial losses for those individuals.
Investigation uncovers rapid asset diversion
To discover the location of approximately 2,300 Bitcoins and more than 600 Ethereum allegedly stored offline by ezBtc, the British Columbia Securities Commission engaged a data forensics firm, without naming it. The probe found that about 935 Bitcoins and 159 Ethereum were swiftly moved to either Smillie’s personal accounts or two gambling platforms. In one instance, a Bitcoin deposit from a customer was transferred to a gaming site within only 14 minutes of being deposited on ezBtc.
As a researcher, I can confirm that according to the findings, it appears that I (Smillie) oversaw the operations of ezBtc and might be accountable for the irregular transfers of customer assets without proper authorization. The panel underscored the fact that not only was I aware of ezBtc’s failure to securely hold all customer assets, but I should have understood the significant financial risks such actions could potentially impose on customers.
The BCSC committee is currently discussing possible punishments, ranging from financial fines and fees, to restrictions on participating in future markets.
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2024-08-13 10:14