Canada_ (Commonwealth) _ The B.C. Securities Commission claims that a now-defunct cryptocurrency exchange with headquarters in Nanaimo, British Columbia, perpetrated a multimillion-dollar securities fraud by directing client funds to cryptocurrency gambling websites.
The commission claims that David Smillie and his numbered firm, doing business as ezBtc, misled clients about their trading platform for crypto assets in a notice of hearing published last month.
According to the commission, Smillie and the business allegedly routed roughly $13 million in bitcoin and ether, another cryptocurrency, to two online casinos without consumers’ consent.
However, between 2016 and 2019, users moved 2,300 Bitcoin and 600 ether tokens into wallets managed by the platform. According to the regulator, the company was dissolved in October 2022.
Smillie and the company reportedly misled clients into believing that the majority of their digital assets were kept offline in “cold storage,” even though they never really maintained enough to protect users’ assets.
The commission asserts that agreements with clients amounted to futures contracts, which are subject to the commission’s authority, despite the fact that Smillie and ezBtc were never registered under the Securities Act of British Columbia.
The company and Smillie are named in multiple cases in British Columbia that date back years, according to online court records searches. Director of Enforcement for the B.C. Securities Commission Doug Muir said the hearing notice follows a thorough investigation into the company.
The business and Smillie won’t go to jail because the investigation is administrative rather than criminal, according to Muir, but they might face financial penalties or possibly be barred from public markets if the commission is successful in establishing its case.
Through a designated company, Goshko brought a lawsuit in the British Columbia Supreme Court in 2021, claiming to have lost between $70,000 and $80,000.
