## Canadian Crypto Exchange Founder Caught Gambling with $9.5M of User Funds

David Smillie, founder of the Canadian cryptocurrency exchange ezBtc, has been accused of misappropriating approximately $9.5 million (13 million Canadian dollars) of user investments for gambling purposes.

### Investigation and Findings

This serious allegation stems from an investigation by the British Columbia Securities Commission (BCSC), the regulatory body in British Columbia, Canada. The BCSC discovered that a substantial portion of user funds, which ezBtc claimed were securely stored in cold storage, were actually diverted by Smillie for personal and gambling use.

The platform operated from 2016 to 2019, during which it collected over 2,300 Bitcoin and more than 600 Ether from its investors. However, the investigation revealed that nearly one-third of these funds were misappropriated. Specifically, 935.46 Bitcoin and 159 Ether were transferred from ezBtc to Smillie’s personal exchange accounts and subsequently used for gambling on platforms like CloudBet and FortuneJack.

### User Impact and Legal Actions

This misuse of funds left many ezBtc customers unable to access or withdraw their investments, leading to significant financial losses. The situation has prompted legal actions against Smillie and ezBtc, with potential sanctions, including financial penalties and bans from market participation, expected to be finalized by September 24.

### Broader Implications

This case underscores the risks associated with cryptocurrency investments, particularly on platforms that lack robust regulatory oversight. It also highlights the importance of transparency and accountability in the management of user funds within the crypto industry.

In a related incident earlier this year, a developer from the Cypher protocol publicly admitted to gambling away over $300,000 from the protocol's redemption contract, further illustrating the potential for misuse within the crypto space.

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