A panel of the British Columbia Securities Commission has found a cryptocurrency trading platform and its owner lied to customers and diverted about $13 million in assets to gambling and personal accounts.

The commission says the company operating under the name ezBtc and incorporated by then-B.C. resident David Smillie told customers their bitcoins would be held in 鈥渃old storage,鈥� a more secure method of keeping digital assets offline.

Instead, the panel found about a third of all the crypto assets that customers deposited with the platform between 2016 and 2019 were diverted to gambling sites or to Smillie鈥檚 personal accounts on other crypto trading platforms.

The commission says in a statement issued Monday that it hired a forensic data analytics firm to determine what happened to the cryptocurrency, and some of it was 鈥渜uickly transferred鈥� either to Smillie鈥檚 accounts or two gambling websites.

It says the panel found that Smillie directed the affairs of ezBtc, and by authorizing the company鈥檚 misconduct, he committed the same misconduct as the platform.

The commission says the company was dissolved in 2022 and didn鈥檛 take part in the hearing, and while Smillie didn鈥檛 attend, he was represented by a lawyer.

It says the panel will next consider what sanctions to impose, which could be monetary or bans from market participation.

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