The BCSC accuses a defunct crypto platform of multimillion-dollar fraud

The cryptocurrency industry’s latest incident involves a defunct crypto platform based in Nanaimo on Vancouver Island. According to Bloomberg, the B.C. Securities Commission (BCSC) has accused ezBtc’s owner of committing a multimillion-dollar securities fraud by diverting customer assets to online cryptocurrency gambling sites.

ezBtc ceased its operations in October 2022, but users had moved around 2,300 BTC and 600 ETH tokens into the platform’s wallets between 2016 and 2019. The company’s founder allegedly told investors that their assets were often kept offline in cold storage, giving the impression of security. However, the firm never had enough assets to cover users’ funds, and the company’s agreements with users fell under futures contracts, which fall under the jurisdiction of the B.C. commission.

The B.C. Securities Commission has alleged that ezBtc was never registered with the commission, which is a violation of securities laws in British Columbia. The regulator further claims that the company did not maintain proper books and records and misled customers about the security of their assets. The regulator alleges that ezBtc diverted approximately $13 million in customer assets to gambling sites, and the company’s founder is now required to pay fines.

According to Const. Gary O’Brien of the Nanaimo RCMP, the detachment’s investigation of the company in 2019 found insufficient evidence to press criminal charges.

“All I can say is that the case was investigated, and there was insufficient evidence gathered by the primary investigator to pursue criminal matters, so they decided it would probably be best to go from a civil angle,” O’Brien said on Tuesday.

“I’m afraid that’s all the information I have at the moment.” O’Brien stated that the file might be reopened if any victims or the Securities and Exchange Commission contact investigators with fresh information.

Sergei Goshko, a software developer from Ontario, said he used the ezBtc platform for cryptocurrency trading until it stopped granting him access to his cash before its website disappeared completely.

Goshko filed a complaint in the British Columbia Supreme Court in 2021 through a numbered business, claiming to be out between $70,000 and $80,000. His lawyers, however, were unable to locate Smillie, and he was unaware that the B.C. Securities Commission was investigating ezBtc and its creator.

“I guess it’s a good thing, so maybe there’ll be some progress,” Goshko remarked on Tuesday.

“Perhaps they’ll finally find him.” Smillie was unavailable for comment.

The BC Securities Commission also alleges that ezBtc was never registered with the agency, and that the company’s agreements with users fell under futures contracts, which are within its jurisdiction. The commission has ordered Smillie and his company to appear at its downtown Vancouver headquarters on June 27 to set a date for a hearing on the regulator’s complaints.

The alleged actions of ezBtc will likely lead to increased scrutiny of the industry, as regulators look to protect investors and prevent similar incidents from occurring in the future.

It is important for investors to exercise caution when dealing with cryptocurrency platforms, as there is always the risk of running into fraudulent investment scams or ponzi schemes. Investors should only deal with platforms that are registered with the relevant regulatory authorities and have a track record of operating in a transparent and trustworthy manner. They should also conduct their own research and due diligence before investing in any cryptocurrency, to ensure that they fully understand the risks involved.

In conclusion, the allegations against ezBtc highlight the need for investors to exercise caution and due diligence while investing in cryptocurrency platforms and exchanges. The cryptocurrency industry is still in its early stages, and investors must be aware of the risks involved. It is vital to choose reputable and regulated platforms to safeguard your investments and protect your assets from fraudulent activities.