B.C. man fined $18.4 million for misusing clients’ crypto funds on gambling
A former resident of British Columbia has been fined a whopping $18.4 million for misusing his clients’ cryptocurrency funds to gamble. The B.C. Securities Commission uncovered that David Smillie, through his company 1081627 B.C. Ltd., operating as ezBtc, committed fraud by diverting nearly $13 million of customer assets for gambling purposes.
The fines imposed on Smillie and his company amounted to $10.4 million, which is the sum that was wrongfully diverted, minus any repayments already made to customers. Additionally, Smillie was directed to pay an $8 million administrative penalty for failing to meet the necessary standards of conduct.
According to a recent decision, a panel from the commission stated that Smillie and ezBtc “fraudulently misused their customers’ crypto assets for personal gain. Their dishonesty was clear and continuous.” The funds collected from the penalties will be made accessible to the victims, although the current financial situation of Smillie and the company’s remaining assets remain uncertain.
During the period from 2016 to 2019, approximately one-third of the crypto assets deposited or traded on the ezBtc platform were diverted to gambling platforms or Smillie’s personal accounts on other cryptocurrency trading platforms. This breach of trust led to a loss of faith in the capital markets, as one customer expressed a diminished confidence in Bitcoin, cryptocurrency, and even banking.
As a consequence, Smillie has been permanently banned from engaging in B.C.’s investment market, with the exception of investing through a registered adviser. The company ezBtc is also permanently restricted from trading in its shares or engaging in any promotional activities.
Despite being represented by a lawyer, Smillie did not attend the hearing, and the panel lacks information regarding his capacity to pay the fines. The company was dissolved in 2022 and did not participate in the legal proceedings.
For a list of authorized crypto trading platforms in Canada, visit the Canadian Securities Administrators website.
