Crypto Exchange’s Founder Gambled $9.5 Million of Users’ Bitcoin and Ether

15/08/2024 | Categories: News | Published by: Heather | Last updated: 15/08/2024

The world of cryptocurrency promises users a high level of security and control over their funds. However, the reality has proven to be quite different, especially when dealing with centralized exchanges.

These platforms often have complete control over users’ funds and operate with little to no regulation, leading to potential risks for investors. A recent case in Canada highlights these dangers, where the founder of a crypto exchange allegedly stole millions of dollars from users and gambled it all away.

EzBtc’s Founder Misappropriates $9.5 Million

The shocking details of this case were revealed by the British Columbia Securities Commission (BCSC). The founder of the Canadian crypto exchange ezBtc, David Smillie, is accused of misappropriating around $9.5 million worth of Bitcoin and Ether from his customers. Instead of safeguarding these funds, Smillie allegedly funnelled the money into his personal gambling accounts.

EzBtc had assured users that 99% of their funds were kept in cold storage, which are offline wallets known for their added security. This promise gave users a false sense of security, leading them to trust the platform with significant amounts of cryptocurrency.

Between 2016 and 2019, users deposited over 2,300 Bitcoins and more than 600 Ethers on ezBtc. Out of these, Smillie allegedly transferred 935.46 Bitcoins and 159 Ethers to his personal accounts, eventually using them for online gambling.

Users of Canadian Crypto Exchange ezBtc Suffer Major Losses

The misappropriation of user funds by Smillie highlights a critical issue with centralized crypto exchanges: the lack of regulatory oversight and the risk of losing control over your assets. This case serves as a painful reminder of the phrase often heard in the crypto community: “Not your keys, not your crypto,” meaning that if you don’t control the private keys to your cryptocurrency, you don’t truly own it.

The financial losses for ezBtc users were severe. After Smillie transferred the funds to gambling sites, ezBtc was unable to repay its users. This lead to the exchange’s eventual dissolution in October 2022. The aftermath has left many investors without their hard-earned money and has raised serious concerns about the safety of funds on centralized exchanges.

Regulatory Actions and Consequences

In response to the scandal, the British Columbia Securities Commission (BCSC) has moved forward with legal actions against David Smillie and ezBtc. The BCSC is currently considering sanctions, which could include hefty fines and a ban on trading for Smillie. This case has drawn significant attention to the need for better regulation and transparency in the crypto industry to protect investors from similar incidents in the future.

This unfortunate event serves as a stark warning to crypto users everywhere. Always be cautious about where you store your funds and remember that the promises made by exchanges may not always be trustworthy.

Gamble with your Own Money!

It’s important to note that gambling, when done responsibly and with your own money, is not a bad thing. It can be a fun and exciting way to enjoy your leisure time. The key is to ensure that you are using your funds and not money that belongs to others, such as investors or business resources.

Misusing someone else’s money for gambling, as seen in the ezBtc case, is not only unethical but can also lead to severe financial and legal consequences. As long as you gamble with your own money and understand the risks involved, it can be a safe and enjoyable activity.

Canadian Bitcoin Casinos

Gambling at Canadian Bitcoin casinos can be a safe and enjoyable experience if you choose reputable platforms. These casinos often provide enhanced security features, such as advanced encryption and blockchain technology. This is to protect your personal information and transactions. Many Canadian Bitcoin casinos are also licensed and regulated by respected authorities, ensuring that they operate fairly and transparently. Additionally, the use of Bitcoin offers an extra layer of privacy. As it allows you to gamble without sharing sensitive financial details.

However, it’s essential to do your research before choosing a Bitcoin casino. Not all platforms are created equal, and some may operate without proper oversight. Therefore increasing the risk of fraud or unfair practices. Look for casinos with positive user reviews, clear terms and conditions, and a history of reliable payouts. By choosing a casino listed on BTCGOSU, you can be confident in its credibility. We thoroughly vet each site before featuring it on our platform. This is to ensure it meets high standards of trustworthiness and reliability.

Also, check whether the casino is licensed by a reputable regulatory body. Such as the Malta Gaming Authority or the UK Gambling Commission. By taking these precautions, you can significantly reduce the risks and enjoy a safe gambling experience at Canadian Bitcoin casinos.