Regulators looking into two cryptocurrency exchanges after websites disappear

Regulators looking into two cryptocurrency exchanges after websites disappear

One cryptocurrency exchange has gone into receivership and another is under scrutiny by the B.C. securities regulator after the websites for both went dark, leaving users unable to retrieve millions of dollars worth of funds.

A spokeswoman for the B.C. Securities Commission said Monday that it has received several complaints about Nanaimo-based, and is commenting publicly on its investigation because it is in the public interest to do so.

“The complainants told us they had bought crypto-assets through ezBtc and have not been able to gain access to their assets. … Customer assets are at risk. Anyone who invested through ezBtc should consider consulting a lawyer about their options for retrieving their money,” said Elise Palmer, the BCSC’s media relations and public affairs adviser, in an emailed statement.

Separately, the BCSC said Monday that it has also received “numerous” complaints about customers being unable to access their assets on Vancouver-based Einstein Exchange.

“The BCSC… on October 31 had been told by a lawyer representing the trading platform that it planned to shut down within 30 to 60 days due to a lack of profit,” it said in a release.

The provincial regulator added on Nov. 1 it applied to the province’s Supreme Court for an order to appoint an interim receiver to protect any assets of Einstein Exchange. The court granted the application and appointed Grant Thornton LLP as interim receiver.

An affidavit posted on Grant Thornton’s website says that a BCSC investigator’s analysis showed that Einstein owes its customers approximately $16.3 million in cryptocurrencies, U.S. and Canadian dollars.

The commission has also notified the RCMP about concerns involving potential money laundering that were raised by a former Einstein employee, Palmer said.

Einstein.Exchange was not loading on Monday, and the exchange and its CEO Michael Gokturk did not immediately respond to requests for comment via Facebook., which dubbed itself Canada’s fastest Bitcoin and altcoin (digital currencies other than Bitcoin) exchange, stopped loading last week. Calls to a number previously listed for the crypto trading platform is out of service.

The BCSC said that to date, no crypto-asset trading platforms have been authorized to operate by the provincial regulator, and do not have the same investor protections as authorized companies.

Larry Cameron, a Nova Scotia-based cybersecurity and technology professional who says he did some contract work for ezBtc, said he has not been able to reach its president David Smillie since July.

He said through his work for ezBtc, Cameron retained access to the company’s Facebook page, and he is now using it to reach out to affected users and gather information.

Cameron says he has been in touch with more than 70 people who have been unable to recoup their digital currencies and funds, some of whom are owed several hundred thousand dollars each. Overall, he estimates that the total amount lost by these users is in the millions of dollars.

“They can’t get a hold of anybody… People have been waiting up to eight months for a withdrawal, and they still haven’t received it,” he said in an interview.

Cameron says he is still owed funds for work done for Smillie, and he also purchased Bitcoin on the platform for a client but never received the cryptocurrency.

None of the allegations against ezBtc or Smillie have been tested in court.

The news comes after the demise of Vancouver-based exchange QuadrigaCX, which sought creditor protection after its founder and chief executive died suddenly late last year leaving its employees unable to locate millions of dollars worth of cryptocurrency, according to court filings. Roughly 76,000 users have come forward to claim they are owed about $214.6 million in cash and cryptocurrency.

QuadrigaCX’s parent company Quadriga Fintech Solutions was granted creditor protection on Feb. 5 and entered bankruptcy proceedings on April 15.

B.C. RCMP constable Gary O’Brien said that ezBtc was investigated in July but there was “insufficient evidence to support the charges, as it was deemed more a civil matter than criminal.”

B.C. Court Services records show that at least eight lawsuits have been filed against 1081627 B.C. LTD, which operates as ezBtc. The list of cases include civil suits at the province’s supreme court and small claims courts.

The Civil Resolution Tribunal in B.C., which handles small claims disputes of $5,000 and under, said last week that there are currently five disputes in progress involving the company.

Ottawa-based developer Rob Johnston said he has tried, for months, every avenue to get his funds back from and Smillie. Johnston said he reached out directly to the president, who later cut off all communications, and is the process of filing a dispute through the provincial tribunal. He deposited Bitcoin last August, and has since been unable to withdraw it, he says, adding that he is owed about $2,600.

“After 10 months of delays, excuses, and broken promises, it’s clear that the respondent has no intention of paying voluntarily,” Johnston said in his application to the tribunal, a copy of which he provided to The Canadian Press.

Calls by The Canadian Press to phone numbers previously used by Smillie, according to Johnston, were either out of service or went unanswered.

Johnston said has tried to serve a dispute notice to both the company and Smillie, a requirement of the tribunal, but he has only been able to serve the firm.

“I’ve done everything I can to serve him… and he is hiding or cannot be found,” he said.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Pope Francis, third from left, watches Pope Emeritus Benedict XVI entering St. Peter’s Basilica accompanied by Monsignor Georg Gaenswein, at the Vatican, Tuesday, Dec. 8, 2015. (AP Photo/Andrew Medichini)
Vatican clears retired US bishop of multiple abuse claims

Retired Wyoming Bishop Joseph Hart exonerated

A dealer slides chips across a blackjack table on Friday, March 16, 2012, in Bangor, Maine. THE CANADIAN PRESS/AP-Robert F. Bukaty
Great Canadian Gaming CEO resigns after travel to Yukon: media reports

Couple intercepted at the Whitehorse airport trying to leave Yukon

Terrance Josephson of the Princeton Posse, at left, and Tyson Conroy of the Summerland Steam clash during a Junior B hockey game at the Summerland Arena in the early spring of 2020. (John Arendt - Summerland Review)
QUIZ: How much do you know about hockey?

Test your knowledge of Canada’s national winter sport

FILE - In this March 10, 2011, file photo, then-Vice President Joe Biden, left, shakes hands with Russian Prime Minister Vladimir Putin in Moscow, Russia. President Joe Biden has been thrown into a high-wire act with Russia as he seeks to toughen his administration’s stance against Putin while preserving room for diplomacy in a post-Donald Trump era. (AP Photo/Alexander Zemlianichenko, File)
Arms deal, hacking complicate Joe Biden’s approach to Russia

Biden wants to manage differences with Russia

People wearing face masks to protect against the spread of the coronavirus walk on the Odaiba waterfront as Olympic rings is seen in the background in Tokyo, Tuesday, Jan. 26, 2021. (AP Photo/Koji Sasahara)
Tokyo Olympic Q&A: Officials try to explain how games happen

‘Playbooks’ to provide step-by-step details on how athletes and others will get safely in and out of Tokyo

Canadian clothing line Rubies specializes in form-fitting clothing for trans and non-binary girls. (Photo by THE CANADIAN PRESS)
Toronto father-daughter duo design swimsuit tailored to transgender children

A Canadian clothing line is helping transgender kids feel confident at the… Continue reading

Toronto Maple Leafs alumni George Armstrong, right, and son of Maple Leafs alumni Syl Apps, Syl Apps Jr., shake hands during a pre-game ceremony before the Toronto Maple Leafs and Winnipeg Jets NHL game in Toronto on February 21, 2015. George Armstrong, who captained the Toronto Maple Leafs to four Stanley Cups in the '60s and wore the blue and white his entire career, has died. He was 90. The Maple Leafs confirmed the death Sunday on Twitter. THE CANADIAN PRESS/Darren Calabrese
Former Maple Leafs captain George Armstrong dies

Former Maple Leafs captain George Armstrong dies

Green Bay Packers' Adrian Amos pauses after losing the NFC championship NFL football game to the Tampa Bay Buccaneers in Green Bay, Wis., Sunday, Jan. 24, 2021. The Buccaneers defeated the Packers 31-26 to advance to the Super Bowl. (AP Photo/Morry Gash)
Aaron Rodgers’ ‘uncertain’ future hangs over Green Bay

Aaron Rodgers’ ‘uncertain’ future hangs over Green Bay

Toronto Argonauts head coach Scott Milanovich calls the plays on the sideline against Winnipeg Blue Bombers during the first half of CFL action in Winnipeg on August 14, 2015. THE CANADIAN PRESS/John Woods
Scott Milanovich steps down as Edmonton’s head coach to pursue opportunities in NFL

Scott Milanovich steps down as Edmonton’s head coach to pursue opportunities in NFL

Most Read