Securities Commission Alleges Fraud By BC Crypto Firm

[ad_1]

The BC Securities Commission alleges that a now-defunct cryptocurrency platform based in Nanaimo on Vancouver Island committed multimillion-dollar securities fraud by diverting client assets to trading sites. online cryptocurrency games.

In a Notice of Hearing issued last month, the commission said David Smillie and his numbered company, which traded as ezBtc, lied to clients about his crypto asset trading platform. .

The commission alleges that Smillie and the company diverted approximately $13 million worth of bitcoin and ether, another cryptocurrency, to two online gambling sites without the customers’ permission.

The regulator says the company was dissolved in October 2022, but between 2016 and 2019 customers transferred 2,300 bitcoins and 600 ether tokens to wallets hosted by the platform.

Smillie and company allegedly told customers that their digital assets were mostly kept offline in what’s called “cold storage,” but they never really kept enough to cover user assets.

Smillie and ezBtc were never registered under the BC Securities Act, and the commission claim agreements with clients amounted to futures contracts, which fall under the jurisdiction of the commission.

Online searches of court records show the company and Smillie are facing a number of B.C. lawsuits dating back several years, and BC Securities Commission Enforcement Director Doug Muir said the notice of hearing comes after a lengthy investigation into the company.

“In this case, as in all of our cases, we need time to investigate, so we need to be able to gather evidence that we are satisfied,” Muir said Tuesday.

“So it takes time to pull together. Our investigations are often long and complex and this one is an example of that.”

Not a criminal case

Muir said the case is administrative rather than criminal in nature, which means the company and Smillie will not face jail time, but could face monetary penalties or even banishment from public contracts if the commission succeeds in proving its case.

const. Nanaimo RCMP’s Gary O’Brien said the detachment’s investigation into the company in 2019 did not find enough evidence to bring criminal charges.

“All I can say is that the case was investigated and there was not enough evidence gathered by the lead investigator to pursue the criminal cases, they have so decided it would probably be best to go from a civilian angle,” O’Brien said Tuesday.

“That’s the only information I can provide at this point.”

O’Brien said the case could be reopened if victims or the securities commission contacted investigators with new information.

“Maybe they’ll find him eventually”

Sergei Goshko, an Ontario-based software engineer, said he used the ezBtc platform for cryptocurrency trading until it stopped allowing him access to his funds before his website does not “disappear completely”.

Goshko filed a lawsuit in the BC Supreme Court in 2021 through a numbered company, and he said he was missing between $70,000 and $80,000.

His lawyers, however, were unable to find Smillie and he was unaware that the BC Securities Commission was taking action against ezBtc and its founder.

“I guess that’s a good thing, so maybe there will be progress,” Goshko said on Tuesday. “Maybe they’ll finally find him.”

Smillie could not be reached for comment.

[ad_2]