The B.C. Securities Commission made a ruling against ezBtc, a crypto trading platform, and its resident, David Smillie. As a result of the fraud these two committed over the span of three years, customers lost crypto assets worth a total of $13 million.
The panel inspected ezBtc’s operations and its resident at the time, David Smillie. The findings were surprising—namely, ezBtc and Smillie made it possible for people to buy and sell crypto assets under the impression that they would be kept in ‘cold storage.’ The term ‘cold storage’ refers to a reliable way of storing digital assets offline, since it keeps them safe from security and cyber threats.
However, instead of being out of harm’s way, these digital assets were misused. Approximately a third of all assets that were deposited were used in one of two ways: they were either diverted to gambling platforms or transferred to Smillie’s personal accounts on other platforms dedicated to crypto trading.
All of these instances of fraud were committed between 2016 and 2019 when online casinos already gained huge popularity. These online establishments are not to blame, as they had no part in the fraud. In fact, online casinos are completely safe, as long as a person does their research and chooses one that tops the charts in terms of customer satisfaction. Due to usually small fees and quick processing times, crypto-based sites usually end up being the fastest payout casinos, but one can certainly stumble upon no KYC sites or those with premier bonuses as another benefit.
As for the precise number of assets being allegedly held in cold storage by ezBtc and then misused, a forensic data analytics firm was put in charge of finding out what happened to the 2,300 BTC and 600+ ethers. According to their report, 935.46 BTC and 159 ethers were passed on to Smillie’s personal account almost right away. The ones that didn’t end up in his personal accounts were spent in two online casinos.
Unfortunately, people weren’t able to regain their losses, so they had to make peace with the loss of their digital assets.
Many are left wondering why Smillie was found guilty of the ezBtc affair. However, he is now regarded as the person who very likely directed these transfers, which sometimes happened mere minutes after a person deposited a digital asset.
He is also being held responsible as he should have been aware of ezBtc’s doing, which ultimately resulted in serious consequences and a huge financial loss for the customers. And even though it was the platform that facilitated the fraud, Smillie was the one authorising or permitting the misconduct, which makes him just as guilty.
It’s yet to be decided how ezBtc and Smillie are going to be sanctioned. They could be ordered to pay a fine or endure bans on market participation.
It doesn’t work in their favour that they didn’t have a representative during the hearings, either. Smillie does have a lawyer representing him, but he was absent during the proceedings.