B.C. Securities Commission imposes $18 M in sanctions over crypto case

By Chuck Chiang, The Canadian Press on December 2, 2024.

British Columbia's provincial flag flies on a flagpole in Ottawa, Friday July 3, 2020. THE CANADIAN PRESS/Adrian Wyld

VANCOUVER – 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 a lawyer, the panel had “no information about his personal circumstances or his ability to pay the sanctions.”

The Canadian Press contacted Smillie’s lawyer, but did not immediately receive a response.

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.

This report by The Canadian Press was first published Dec. 2, 2024.