According to local media reports, the regulator accused BCSC creator David Smillie of orchestrating a multimillion-dollar securities fraud scheme.
Between 2016 and 2019, users transferred more than 2,300 bitcoins and 600 ethers to the ezBtc platform.
Smillie assured investors that their assets were safely stored in cold storage, but the platform did not have enough reserves to cover users’ funds.
The platform’s creator defrauded his customers by using their funds without permission – he transferred about $13 million in bitcoins and ethers to gambling sites.
The regulator also claims that the ezBtc platform was never registered with the agency under the B.C. Securities Act.
And the commission agreements with customers were futures contracts, which also fall under the agency’s jurisdiction.
BCSC enforcement chief Doug Muir added that the platform ceased to exist in October 2022.
Several years ago, the site had already faced lawsuits, so the agency began to investigate its activities. Muir noted, however, that the case is of an administrative, not criminal, nature..
That means that even if the regulator is able to prove its case, Smillie will not face jail time, but he will have to pay an administrative fine.
Recall that in April the police from the Canadian province of Alberta together with the analytical company Chainalysis opened an investigation center for cybercrime and cryptocurrency fraud.