A securities regulator in Canada has charged the head of a crypto exchange with gambling users’ crypto.
According to a new official decision from the British Columbia Securities Commission (BCSC), crypto exchange ezBtc founder David Smillie used CAD $13 million ($9.48 million) in customer funds for online gambling.
[adinserter block="1"]“The respondents perpetrated a fraudulent scheme relating to securities by lying to customers about a crypto asset trading platform the respondents claimed to operate and by diverting approximately $13 million in customer assets for their own purposes.”
In the commission’s investigation, regulators found “strong” indicators that Smillie gambled with customer funds, funneling their money from the exchange to betting sites FortuneJack and CloudBet.
“As more Bitcoin came into Smillie’s Exchange Accounts from ezBtc, more Bitcoin were sent from Smillie’s Exchange Accounts to the gambling sites. This is a strong indication that Smillie used funds from ezBtc to fund his accounts at those gambling sites.”
The regulator says the betting accounts the crypto funds were connected to were owned either by an ezBtc employee or Smillie himself.
“The majority of ezBtc’s transfers to CloudBet were to CloudBet accounts belonging to Smillie or an ezBtc insider. Over 21.3% of bitcoin transfers from ezBtc to CloudBet were made to CloudBet deposit addresses that also received bitcoin from Smillie’s accounts at Poloniex, Binance and Kraken.”
Smillie did not personally attend the hearing, and his whereabouts are currently unknown.
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