$18M penalty handed to B.C. crypto platform owner who diverted clients’ cash
The British Columbia Securities Commission has imposed more than $18 million in sanctions on a cryptocurrency trading platform and its owner who it says diverted customers’ assets to gambling and personal accounts.
The commission says it has ordered David Smillie and his company, ezBtc, to pay $10.4 million representing the net amount they’ve gained from their customers “less repayments.”
Smillie has also been ordered to pay $8 million as an administrative penalty, the commission says.
In August, a securities commission panel found that Smillie and ezBtc told customers their digital holdings would be held off-line, a more secure way of storage against cyberthreats and unauthorized access.
But the panel found that about a third of all the crypto assets that customers deposited with the platform between 2016 and 2019 were diverted, some to Smillie’s personal accounts on other trading platforms and others to gambling sites.
The commission says the company was dissolved in 2022, and that while Smillie was represented by lawyer Cody Reedman, the panel had “no information about his personal circumstances or his ability to pay the sanctions.”
Reedman declined to comment on the decision when contacted by The Canadian Press.
The commission panel said a forensic data analysis found that of the total $13 million that was diverted, some was “quickly transferred” to Smillie’s accounts or two gambling sites.
The commission says Smillie has also been permanently banned from participating in B.C.’s investment market except as an investor through a registered adviser.
The commission is owed hundreds of millions of dollars in unpaid fines handed out to hundreds of individuals and companies.
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