The British Columbia Securities Commission has ordered David Smiley, the founder of cryptocurrency trading platform ezBtc, to pay $18.4 million for defrauding investors and defrauding investors in digital assets.

The regulator demanded that David Smillie and the company 1081627 BC Ltd, known as ezBtc, return $10.4 million obtained illegally, and also pay an administrative fine of $8 million. The agency also banned Smillie from participating in the investment market of the British Colombia, and ezBtc – to trade securities and engage in any advertising activities.

According to the Commission, Smiley embezzled more than $13 million in client assets, spending them on personal needs and online gambling. Smiley initially encouraged investors to deposit BTC and ETH into the ezBtc platform for cryptocurrency trading. They were offered a “unique savings program that allowed them to safely earn 9% per annum with daily payments.” However, ezBtc charged fees for deposits, withdrawals and trading.

Between 2016 and 2019, customers contributed over 2,300 BTC and over 600 ETH to the ezBtc platform. In 2019, the agency received complaints from at least four affected customers, after which the Commission began an investigation.

In April 2017, one of the deceived users tried to withdraw $73,000 from the platform, but was denied. When the user once again tried to transfer bitcoins, Smiley told him that the ezBtc website had been hacked and his 484 bitcoins had been stolen. In May 2021, Smiley personally wrote the victim a check for $73,000, but never returned the money.

“Smiley made various excuses about the stolen funds and threatened customers who complained publicly. By moving client assets into his personal accounts instead of cold storing funds in ezBtc, Smiley jeopardized clients’ finances,” the Commission said.

Previously, Canadian authorities promised to implement a new tax reporting system for crypto assets (CARF) by 2026 to combat cryptocurrency fraud and tax evasion.