Customers of the ezBtc cryptocurrency exchange believed that their funds were being held in what's known as cold storage - offline wallets protected from hackers and other threats.
In reality, roughly a third of the crypto assets deposited with the exchange or acquired through it were sent either to gambling sites or into personal accounts at other crypto exchanges belonging to ezBtc's founder, David Smillie, the B.C. Securities Commission found.
Mr. Smillie “blatantly and repeatedly lied to customers,” wrote a panel of three commissioners in the decision published Monday, noting that customers who complained publicly were threatened with defamation lawsuits.
Mr. Smillie and ezBtc have been ordered to pay $18.4-million. Money that is collected by the securities commission can be provided to victims. However, the panel said it has “no evidence of Smillie’s personal circumstances or his ability to pay.”
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