ezBTC Founder Found Guilty of Using $9.5M of Customer Funds on Gambling

• Background:
  ezBTC, a now-defunct crypto exchange incorporated in British Columbia, Canada, was found guilty by the BC Securities Commission (BCSC) of misusing customer funds.

• Misuse of Funds:
  Between 2016 and 2019, approximately $9.5 million (about one-third of all deposited crypto assets) were diverted by founder David Smillie to gambling accounts on two well-known platforms: CloudBet and FortuneJack.

• Scale of Diversion:
  The panel found that ezBTC transferred 935.46 bitcoins and 159 ethers to these gambling sites. While ezBTC did move many assets to cold storage (around 2,300 bitcoins and 600 ethers), a significant amount was siphoned off for Smillie’s gambling.

• Customer Impact:
  Customers were misled to believe their crypto was being securely stored, but many were unable to recover all their assets, leading to actual financial losses.

• Accountability:
  The BCSC panel held Smillie personally responsible for the misconduct, stating he was fully aware of the misuse and its consequences. His actions were equated to the platform’s misconduct.