Canadian Crypto Platform Accused of Misappropriating $9.5 Million
A regulatory panel in British Columbia has accused the Canadian cryptocurrency trading platform ezBtc and its founder, David Smillie, of diverting approximately 13 million Canadian dollars ($9.5 million) of user funds for personal use, including gambling.
EzBtc Goes Offline After Allegedly Stealing User Funds
From 2016 to 2019, ezBtc attracted significant investments, collecting over 2,300 Bitcoin and 600 Ether from users. Despite claiming that all user funds were in cold storage, the platform abruptly went offline in September 2019 and was ultimately dissolved by 2022. An investigation by the British Columbia Securities Commission panel revealed that Smillie used nearly one-third of user funds for gambling and personal expenses.
- EzBtc diverted user investments for personal use, including gambling.
- The platform attracted over 2,300 Bitcoin and 600 Ether from users.
- Siphoned funds led to the permanent closure of ezBtc in 2019.
- Investigation shows Smillie used a significant amount of user funds for gambling.
Impact on Canadian Crypto Regulation
Canada has taken a stringent stance against crypto companies following the ezBtc scandal. Last year, Canadian Securities Administrators imposed new regulations mandating crypto firms to enhance investor protection through pre-registration commitments. This includes agreements to segregate crypto custody, appoint a chief compliance officer, and prohibit leveraged trading and stablecoin transactions.
Stagnation in Crypto Adoption in Canada
Despite global interest in cryptocurrencies, Canada has seen minimal adoption, with only 3% of the population using digital currencies for everyday transactions. Factors contributing to this low adoption rate include a preference for traditional payment methods like cash, cards, and e-transfers, and a hesitance to move away from cash transactions.
Increased Awareness of Crypto Scams in Canada
Earlier this year, the Canadian Anti-Fraud Centre issued a warning about a rise in crypto scams targeting Canadian citizens. In response, the CAFC and the Canadian Investment Regulatory Organization have collaborated to raise awareness about these scams, particularly those involving prolonged online communication. This heightened vigilance aims to protect Canadian investors from falling victim to sophisticated crypto fraud schemes.
Hot Take: Safeguarding Crypto Investments in Canada
As the Canadian crypto landscape evolves, ensuring the protection of investor funds remains a top priority. The regulatory actions taken against ezBtc underscore the importance of robust safeguards and transparency in the cryptocurrency industry. By implementing stringent regulations and enhancing awareness about crypto scams, Canada aims to create a more secure environment for crypto investors.
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