Customer Funds Misappropriated and Gambled

From 2016 to 2019, David Smillie, the founder of the now-closed Canadian crypto exchange ezBtc, allegedly embezzled approximately 13 million CAD (8.6 million euros). Reports suggest that out of the 2,300 Bitcoin and 600 Ether collected from investors, Smillie illicitly took 935.46 Bitcoin and 159 Ether for gambling purposes, transferring the funds to personal accounts or directly to online gambling providers like CloudBet and FortuneJack immediately after deposit.

Unrealistic Returns Promised by ezBtc

ezBtc had assured investors of a 9% annual return on their deposits, sparking speculations about the motives behind Smillie’s actions. It is unclear how he intended to generate such high profits, leading to assumptions that he may have attempted to recoup losses through online gambling. Alternatively, some speculate that Smillie may have established ezBtc with the intention of using customer funds for gambling, possibly to satisfy a gambling addiction.

Similarities to FTX Scandal

The case bears similarities to the FTX scandal involving Sam Bankman-Fried, where billions in customer funds were misappropriated to fund Alameda Research. While the scale differs, both instances involve CEOs misusing customer funds for questionable dealings, trying to evade responsibility citing technical issues or alleged hacks.

Verdict Expected in September

A court in Canada is set to decide on David Smillie’s penalty in September, with a judgment expected by the 24th. Potential outcomes include substantial fines and a ban from market participation. Smillie, who did not attend the initial hearing due to health reasons, was represented by his lawyer.