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.
The BCSC found that nearly one-third of these funds were redirected by Smillie for gambling and personal use. The court filing states that funds were transferred to gambling websites, leading to customers being unable to access or withdraw their funds and resulting in 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.
