Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
BCSC Fines Fraudulent Crypto Platform ezBtc $18 Million
Enforcement | Dec 4, 2024
Image: Freepik
BC Securities Commission Issues $18.4M Penalty for Crypto Platform ezBTC and Founder for Fraudulent Practices
On Dec 2, 2024, the British Columbia Securities Commission (BCSC) announced an $18.4 million CAD fine to BC-based crypto platform, ezBtc and David Smillie, for misappropriation of investor funds. A BCSC panel made the decision and issued the order on November 27, 2024 for what is now known as the largest fine against a cryptocurrency platform in Canada to date, surpassing previous fines such as $6 million CAD penalty issued to Binance by Canada's Financial Transactions and Reports Analysis Centre (FINTRAC) for anti-money laundering compliance failures.
Fraud Uncovered
David Smillie and his company, ezBtc (registered as 081627 B.C. Ltd.), told customers that their crypto assets were safe in cold storage but it was a blatant lie. Instead, over 935 Bitcoin and 159 Ether were funnelled to personal accounts and used for personal spending including gambling. The BCSC said this was serious fraud that damaged trust in the market. Smillie and ezBtc were found guilty of fraud under section 57(b) of the British Columbia Securities Act.
BCSC Panel said:
”In this case, the respondents’ misconduct eroded trust in the capital markets."
See: Alberta Launches ScamSheild Investor Protection Challenge
Customer testified:
"[I experienced] loss of trust in bitcoin for sure, crypto currency in general, even banking to some degree.”
Penalties and Fines
Smillie didn't even show up to his own hearing and was represented by his lawyer Cody Reedman. Below is the punishment. Note that the panel wasn't aware if David Smillie could pay the fine or not when they issued:
- A $10.4 million disgorgement fine was issued to Smillie and ezBtc to replay the equivalent value of the misappropriated funds/assets.
- An additional $8 million fine was issued to Smillie to serve as a deterrent against future misconduct.
- David Smillie is also permanently barred from trading, promoting, or holding positions in the securities market except for personal investments made through a registered dealer.
As of now, there is no public information about any criminal charges and the BCSC didn't disclose whether or not they recommended criminal charges to law enforcement agencies.
5 Ways to Spot a Fraudulent Crypto Platform
Stay alert and aware. Do your research and homework. If you suspect something is wrong, better to be safe than sorry. Walk away and consider alerting authorities for review.
See: Fraud Prevention Month: CSA encourages Canadians to ask questions before investing in crypto assets
- Over promising (too good to be true) - if a platform 'guarantees' huge profits, be skeptical. All real investments come with some uncertainty but anything that seems too good to be true, probably is.
- Registration with securities regulators? -Check if the platform is properly registered with Canadian regulators to do business with Canadians. If it’s not, it might be operating in a legal gray area.
- Overly confusing or complicated terms - If you can't figure out how your funds will be managed, then best to avoid.
- Pressure tactics - Scammers and fraudsters often try to pressure prospects into making quick decisions without thinking. Legitimate companies should be more professional allowing you to ask questions and take time to evaluate your options.
- Lack of transparency - If a crypto platform doesn't provide clear details of how it operates then that's a massive red flag. This includes websites that are not transparent about their leadership and hide behind numbered companies and don't show their face.
Why This Matters
As the digital asset market grows, clear regulations, investor awareness and robust enforcement are critical to creating a safer and and more trustworthy ecosystem.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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