A Nanaimo-based cryptocurrency company has been handed $18.4 million in financial sanctions after the BC Securities Commission (BCSC) found it had committed fraud.

David Smillie has been handed an $8 million administrative penalty, on top of a repayment to his customers issued to him and his company, ezBtc, of a combined total of $10.4 million.

BCSC found that Smillie was taking customers money and diverted almost $13 million for gambling.

The company, ezBtc, allowed customers to buy and sell crypto assets with the understanding they would be held offline, which is to protect against cyber threats and unauthorized access.

Between 2016 and 2019, the company would instead divert approximately one-third of the funds invested into Smillie’s personal account or gambling sites.

The panel says Smillie “blatantly and repeatedly lied to customers” and would threaten customers who complained publicly.

“In this case, the respondents’ misconduct eroded trust in the capital markets,” the panel said.

Smillie is now banned from participating in B.C.’s investment market except as an investor through a registered advisor and ezBtc is permanently prohibited from trading or engaging in promotional activity.

Smillie did not attend the hearing but a lawyer attended in his absence and the company was dissolved in 2022.

RELATED FROM 2023: Cryptocurrency scams have tripled in B.C., losses of $24 million in last year alone

Cryptocurrency scams common in Canada

The Canadian Anti-Fraud Centre says cryptocurrency scams are one of the common investment scams.

Investment scams typically promise higher-than-normal returns, however, investors lose all their money.

BCSC also advises people to make sure to only invest in cryptocurrency using the platforms that are authorized to do business with Canadians, as listed by the Candian Securities Administrators here.



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