Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
In a care[...]
BC Crypto Trading Platform Defrauds Customers of $13M
Enforcement | Aug 12, 2024
Image: Freepik/rawpixel.com
ezBtc defrauds traders of $13 million through bogus claims of cold storage
Today, the British Columbia Securities Commission (BCSC) announced that BC-based crypto trading platform, ezBTC, has scammed clients out of $13 million by pretending to hold their assets in cold storage. David Smillie, the platform's operator, instead transferred user funds to his own accounts and online casinos. Crypto is still full of hazards and there's a pressing need for more consumer protection. Read the statement.
False claims were made by ezBtc that it would securely store client funds in cold storage. In reality, more than 935 bitcoin and 159 ether, worth around $13 million, were taken to Smillie's personal accounts and internet casinos. Customers experienced severe financial and psychological distress as a result of being unable to withdraw their money.
The BCSC came to the conclusion that Smillie and ezBtc had committed securities fraud in violation of Section 57(b) of the Securities Act. The Commission underlined that in order to prevent future instances of this kind of fraud, stronger sanctions and more widespread enforcement are required.
See: All Crypto Exchanges to Register as Investment Dealers
The findings of the BCSC highlight the deficiencies in the existing regulatory framework. It took many years, from 2016 to 2019, for customers to start complaining about the fraudulent activity.
Smillie's actions damaged investor confidence in digital asset platforms in addition to misleading investors. The CSA hosts a list of regulated platforms that are registered and allowed to do business with Canadians.
Conclusion
As digital assets become increasingly popular, there's a pressing need for strong regulatory frameworks and improved consumer protection measures. Establishing accountability and stronger oversight is critical to fostering confidence and protecting the interests of all stakeholders in the crypto ecosystem.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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