- A Canadian regulator has found defunct crypto exchange ezBtc guilty of gambling user funds
- The regulator found out that the exchange’s CEO sent over $9 million of user funds to gambling sites
- Some of the funds were sent to gambling sites within minutes of being deposited
Five years after permanently going offline, a Canadian regulator has disclosed that crypto exchange ezBtc used user funds to fund gambling activities. The regulator said that the exchange and its founder, David Smillie, sent over $9 million to gambling sites some of which were sent a few minutes after being deposited. ezBtc misled its users saying that all funds were stored in cold storage, making it impossible for users to suspect that their funds were used by Smillie for personal gains.
Funds Withdrawn 14 Minutes After Being Deposited
According to the findings of a panel chosen by Canada’s provincial regulator, the British Columbia Securities Commission (BCSC), the exchange and its founders used customer funds for personal use.
Apart from gambling activities, funds were also deposited in other crypto trading platform accounts controlled by Smillie. The panel revealed that ezBtc users were unable to withdraw all their assets leading to losses.
Smillie siphoned 935 BTC and 159 ETH, with some of the transfers happening 14 minutes after users deposited assets on the platform. BCSC noted that it’s yet to decide the fate of the exchange and Smillie, but sanctions may be in the offering.
2,300 BTC Deposited in Three Years
ezBtc operated for three years ending in 2019 and saw investors deposit 2,300 BTC and 600 ETH, making the misappropriated funds a third of the total funds held by the exchange.
Smillie isn’t alone in using user funds to fund his gambling appetite. Three months ago, a developer of Cypher Protocol admitted to stealing $300,000 in crypto to quench his gambling addiction.
With a BCSC executive previously saying the case isn’t considered to be criminal, it’s to be seen whether the findings will change BCSC’s stand.
