Canadian Crypto Exchange ezBtc Defrauds Users of $9.5 Million in BTC and ETH, Funds Used for Gambling
The British Columbia Securities Commission (BCSC) has revealed that the now-defunct Canadian cryptocurrency exchange ezBtc and its founder, David Smillie, defrauded investors out of approximately $9.5 million (13 million CAD) in Bitcoin (BTC) and Ethereum (ETH). From December 2016 to September 2019, ezBtc accumulated over 2,300 BTC and more than 600 ETH from customer deposits, under the pretense of securing them in cold storage. Contrary to these claims, the BCSC discovered that Smillie diverted nearly one-third of these funds for gambling and personal use, causing customers to lose their ability to withdraw their investments. The BCSC has mandated further submissions on sanctions before imposing financial penalties and market restrictions. This case underscores ongoing fraudulent activities in Canada’s crypto sector, despite growing institutional interest in cryptocurrencies.
Bearish
The fraud discovered at ezBtc could lead to increased regulatory scrutiny, which might impact overall market sentiment negatively. The inability of users to withdraw their investments and the misuse of funds are likely to erode trust in crypto exchanges, potentially causing a short-term pullback in market participation and trading volumes, especially within the Canadian market. This sentiment might extend to other regions as well, affecting the general perception and stability of the crypto market.