British Columbia Securities Commission has unveiled how a Canada-based crypto exchange lost and gambled millions of investors’ funds. The founder of the crypto exchange, misappropriated millions of customer funds for personal use, leading to significant investor losses.

The crypto trading platform massed about 2300 BTC and thousands of Ether between 2016 and 2019. After this, the exchange disappeared online and was later dissolved in 2022. The British Columbia Securities Commission (BCSC) set up a panel to investigate the misappropriation of investors’ funds in exchange. Reports from the regulatory board revealed that the CEO, David Smillie, misappropriated approximately 13 million Canadian dollars ($9.5 million).

$9.6 million cryptocurrency investments were diverted and used for gambling. After this, the CEO of the ezBtc platform claimed to store all its users’ crypto investments in cold storage. Approximately 935.46 Bitcoin and 159 Ether were diverted for personal use and gambling, making nearly one-third of users’ funds.

“We found that in the aggregate, 935.46 Bitcoin and 159 Ether were transferred by ezBtc to Smillie’s exchange accounts or CloudBet and FortuneJack. The transfers to the two gambling websites were sometimes direct from ezBtc, and sometimes indirect from ezBtc to Smillie’s exchange accounts and then to the gambling websites.” The panel further noted that the “deceit” orchestrated by Smillie and ezBtc “led to actual loss” as customers could not withdraw their assets.

According to the court filing, sanctions will be imposed by Sept. 24, and they could range from monetary sanctions to bans on market participation. Although David and ezBtc representatives did not attend the hearing, they were represented by a lawyer.