Marking 20 years
of bold journalism,
reader supported.
Rights + Justice
Science + Tech

Another Vancouver-Spawned Bitcoin Firm Accused of Owing Millions

Meet David Smillie, pioneer in the crypto Wild West, and the people trying to corral him. A Tyee exclusive.

Ethan Lou 26 Jul

Ethan Lou’s first book, Once a Bitcoin Miner, a memoir through scandal and turmoil in the cryptocurrency Wild West, will be published in 2020 by ECW Press.

Last year, I made five withdrawals totalling almost $17,000 from ezBtc, an exchange platform for buying and selling cryptocurrency, then based in Vancouver. I hit delays every time. Once I did not see my money for more than a month.

That was the proverbial last straw. I swore off the platform. I cast it out of my mind.

I had little idea of the turmoil beneath the surface.

Now I have discovered I was far from the only one to experience withdrawal delays. In fact, some users who tried to take out their money last year say they are still owed to this day. While it is unclear how many claimants there are, or how much is being claimed in total, ezBtc faces at least six lawsuits in British Columbia alone. Among them are two from former business associates claiming millions.

Sound familiar? It was a similar story with the ill-fated QuadrigaCX, also from Vancouver. Its collapse was fuelled by the death of founder Gerald Cotten, who, his widow said, took to the grave the password needed to retrieve almost $200 million in cryptocurrency. But Quadriga’s troubles began months before, when users attempting withdrawals could not get their money out.

Such incidents create colourful copy. The cryptocurrency realm is populated by intriguing characters worthy of Hollywood. My inquiries into ezBtc turned up yet another one, David Smillie.

But shadowy as it seems, the world of cryptocurrency is painfully real for people who lose money. And critics pounce on such moments as proof a lawless realm needs policing. Exchanges handle billions in assets and allow effortless yet irreversible transactions, but operate with little regulatory oversight and are surprisingly easy to set up. As Bitcoin becomes mainstream, any accusation against a platform could greatly stain cryptocurrency in the eyes of the public.

Now it seems ezBtc risks becoming the next cautionary tale.

In some of the lawsuits, the court ruled against ezBtc because the company failed to respond on time or show up at trial. The biggest claim, alleging ezBtc owes a lender 4,700 Bitcoins, worth more than $60 million at current prices, has yet to go to trial. ezBtc says the claim is without merit.

Smillie, ezBtc’s owner, declined to comment beyond saying there have been “considerable misconceptions” about his company. That response was similar to some ezBtc court filings, in which the company denied users’ claims, but without elaboration. The ezBtc Twitter account said on Tuesday the company was “prioritizing our members that have crypto or fiat caught in the backlog.”

Who is David Smillie?

Born in 1982, David Graham Smillie attended Vancouver’s BC Institute of Technology, graduating with a diploma in broadcast and media communications.

Smillie worked with CTV before crossing the Atlantic to work in London. By all appearances, it was a high-flying career. Smillie moved between high-profile media outlets and his work took him around the world. London treated him well. He even met a girl.

Yet Smillie did not stay. He eventually went back home. A novel idea ran through his head. He was going to start a cryptocurrency exchange.

In the summer of 2016, Smillie registered a numbered corporation, 1081627 B.C. Ltd., that he would use to operate ezBtc. Initially based in Vancouver, its address is now a brick-red office block in downtown Nanaimo, B.C., about 100 kilometres north of Victoria.

“When I first decided to start my own business, I had no idea how little I knew,” Smillie wrote in a LinkedIn post. “It’s amazing how much I’ve learned.”

It is easy to begin. Pre-packaged exchange code is widely and cheaply available. Or you can just hire someone on the freelancing website Fiverr to build the platform.

The next steps are a little harder. An exchange needs good banking relations because it moves around a lot of money, as Smillie told me in an email last year. He wrote that ezBtc had “three bank accounts with our transparent, Bitcoin-friendly bank.”

And an exchange needs a large number of Bitcoins on hand to facilitate withdrawals for users.

In 2016, Smillie got to know a man selling Bitcoin, Rick Godwin, from Whistler. They met via the website LocalBitcoins, which connects cryptocurrency buyers and sellers directly, Godwin said in an interview. He added that it was before Smillie launched ezBtc.

“No matter how much Bitcoin he would buy from me, he wanted more and more and more,” Godwin said. “It turned into more of, like, can I advance him?”

Smillie wanted more Bitcoin on credit and proposed an interest rate of 2.5 per cent per week, or 130 per cent per year, Godwin said. That was low in the cryptocurrency world, he added.

Godwin lent Smillie the Bitcoin. That loan would spark a fierce dispute that is still unfolding.

A Christmas Eve confrontation

A software developer, Godwin had been on the internet so early he was able to own a one-word domain name, Before iPhones, before Twitter or Facebook, Godwin had a special cable car haul equipment to his cliff-top home so that he could have “the biggest, fattest, fastest fibre connection” in the region. Godwin is old-school internet. He still uses Hotmail for email.

In 2016, Godwin sold and funnelled the proceeds into the cryptocurrency Ether, then a tiny fraction of its current price. Godwin had also participated in what was then a blockchain crown jewel, The DAO, a sort of investor-directed venture capital fund that collapsed in 2016 after a colossal hack

The dastardly deeds, brazen thefts and the highs and lows of the techno Wild West — Godwin has seen them all. And he is wary.

Godwin said he made sure to put everything on paper when he eventually lent ezBtc 174 Bitcoins. Smillie didn’t pay him back, Godwin said, and dodged his attempts to get his money back.

On Christmas Eve 2016, when Bitcoin was worth about $900 US, Godwin confronted Smillie at his father’s house north of Vancouver.

“There were 20 members of his family there,” Godwin told The Tyee. “I said: ‘You owe me a-quarter-million dollars. Right now, that’s what you owe me.’ And I made it abundantly clear to his entire family.”

In his legal response, Smillie said he was “alarmed” and that Godwin acted “uninvited and aggressively.” Smillie called the RCMP.

According to Godwin’s lawsuit, police then contacted him on Boxing Day, telling him to stay away from Smillie, although the latter would reach out 10 days later.

“Smillie contacted the plaintiff via text message and advised that he would ‘reconcile’ the amounts owing to the plaintiff, but that if the plaintiff attempted to contact him again he would ‘dial 911,’” court filings say.

In March 2017, Godwin sued for more than 280 bitcoins, taking into account what he said was interest. By now the amount allegedly owed would be more than 4,700 Bitcoins.

Smillie responded that his company had fully repaid any loans with either cash or Bitcoin and disputed the total borrowed. He added the stated interest rate exceeds 60 per cent per year and was “criminal” and “illegal and unenforceable.” The Criminal Code makes charging interest above 60 per cent illegal, except under certain conditions.

The making of a Canadian crypto star

In the meantime, ezBtc rose quickly in the domestic cryptocurrency scene. It became one of four platforms whose data were used to calculate the Canadian Bitcoin Index, a widely used guide for local cryptocurrency prices.

At the time, success was not hard. In 2017, Bitcoin rose 20-fold to $20,000 US. Everyone wanted to buy cryptocurrency, and an exchange would take a commission on every trade.

Smillie, who describes himself as a “creative visionary,” could not have picked a better time to start an exchange. Life was good. Smillie became a father, and made plans to marry his girlfriend, who he met New Year’s Eve 2012 in an upscale London bar.

“David [proposed] with a beautiful three-carat ring in the presidential suite at River Rock Hotel in Vancouver,” read an article from a wedding publication.

As Bitcoin climbed and climbed, Lavish Engagements planned a “stunning elopement” for the couple at Maple Bay Manor in the heart of Vancouver Island’s wine country, a “luxurious winter wedding in an intimate setting using deep navy, silk linens with gold cutlery.”

That influx of customers brought by 2017’s Bitcoin surge was also a curse. Already leery of cryptocurrency companies, banks became unnerved by the spike in incoming cash as exchanges sold more and more Bitcoins. And users of some exchanges started experiencing delays in withdrawing money.

That happened to ezBtc users too. In 2018, I raised the matter with Smillie.

“Most banks are fine,” he told me an email, “but you need to spread payments out, which can be a hassle when accumulating funds for larger payouts.”

Smillie wrote that he wanted to “learn how to handle these things better in the future while maintaining good banking relationships.”

“Honestly, I think crypto and the Big Five/Six [banks] is on the radar this year, just from what I’ve read, which is, again, why it’s important for us to ramp up volume slowly. It’s unfortunate because, as a business, we follow all the rules.”

Users disagreed. Online forums like Reddit were filled with their grievances about problems cashing in their Bitcoins. They are largely anonymous and difficult to verify, but The Tyee has reviewed four lawsuits from users and spoken to three others who say they made withdrawals last year, but did not receive the money. Altogether, their claims total more than $100,000.

Three claimants said that after they raised the matter, the company promised to pay them, but didn’t.

Evan McCallum and Tomasz Swiecki, who both sued ezBtc, said the company sent them cheques that bounced. McCallum said the company subsequently went uncontactable.

Godwin said that when people tried to press the issue, Smillie would lash out with legal threats.

According to court records and interviews, three claimants ended up reaching agreements with Smillie that restrict what they say publicly. Two said Smillie had threatened to sue them if they talked about their concerns.

582px version of DavidSmillie.jpg
David Smillie set out to ride the crypto-wave. Just a few years later, he faces numerous lawsuits by people saying they want their Bitcoin back.

But as 2018 approached its end, Smillie was again at the receiving end of a lawsuit. His own employee sued him.

Joseph Goldlust, ezBtc’s operations director, said in a lawsuit he lent Smillie 12.5 bitcoins that have yet to be repaid and was fired after raising the matter. It is unclear if Joseph Goldlust is the same person as ezBtc employee Yossi Goldlust, mentioned in at least three user lawsuits as a person handling payments. Yossi is commonly short for Yosef, the Hebrew form of Joseph.

A message sent to Yossi’s ezBtc email bounced. A request for comment sent through Joseph’s lawyer went unanswered. Online court records show Smillie has not filed a response to Joseph’s suit.

Smillie had other problems.

In 2017, Smillie was sued by Capital One Bank, which said he owed almost $10,000 in credit card debt.

That didn’t involve Smillie the ezBtc founder — only Smillie the man — but the two have become increasingly synonymous. Smillie appeared to take great pride in rolling up his sleeves to deal with the company’s issues.

“I’m passionate about developing creative innovative ideas to improve processes and solve problems,” he said on his LinkedIn profile. Running ezBtc “taught me things that could never be learned.”

Smillie is often both the public face and the point of contact for customer service at ezBtc. As the accusations of withdrawal delays mounted, his personal life was increasingly thrown into the fore.

By the end of April, some claimants felt they had had enough. They approached the police.

Short arm of the law

Cryptocurrency exchanges appear to function like banks. People make deposits and withdrawals. But banks are heavily regulated, and their deposits insured. Cryptocurrency is gone once transferred. The regulations are few for exchanges, if any.

That has been the spirit of Bitcoin, created to circumvent banks and governments, a middle finger to the traditional order. Now Facebook is entering the fray with its own cryptocurrency and slang like “shitcoin” punctuates congressional hearings. U.S. President Donald Trump tweets about Bitcoin. U.S. authorities probe major exchanges. The days of the Wild West seem numbered.

But while Canada has stepped up regulation, unveiling new rules for cryptocurrency exchanges this month, those rules dealt mostly with reporting requirements and anti-money-laundering, not protecting users. When something goes wrong, there is still little recourse.

John Roberts, a user suing ezBtc, said in his lawsuit he complained to the BC Securities Commission.

But the commission’s hands are tied. It said in a statement to The Tyee it regulates only securities and derivatives, and that while an exchange may theoretically fall under its mandate depending on how it operates, none currently do.

The Investment Industry Regulatory Organization of Canada said the same, although it added it expects to “clarify how regulatory requirements will apply to crypto-asset trading platforms.”

The Nanaimo RCMP detachment looked into the allegations against ezBtc, but decided last month no charges were warranted.

“It looks like the investigator was leaning toward this’s being a civil matter,” a spokesman said. “This determination came after speaking with our Crown counsel.”

‘Some work to be done’

Kyle Kemper, part of the leadership committee of the Chamber of Digital Commerce Canada, a blockchain industry association, said the private sector needs to police itself.

The industry needs “to ensure that someone is not creating a site, creating an exchange, without strong key policies,” he said.

“This is an opportunity for some work to be done, at the association and at the industry level.”

That was exactly what happened in Japan after the 2014 collapse of Tokyo-based Mt. Gox, then the world’s biggest cryptocurrency exchange. The country emerged as a cryptocurrency mecca.

But Mt. Gox’s former users didn’t get their money back. A New York private-equity firm has offered to buy their claims for less than 10 cents on the dollar.

Quadriga claimants may face the same grim situation. An investigation turned up $28 million in assets, against almost 10 times that figure in debt.

It is unclear what will happen for claimants of ezBtc or the future of the company.

The exchange went offline for “unexpected maintenance” on Monday. It resumed operations the next day, tweeting, “We have halted BTC [Bitcoin] deposits, new registrations and account verifications.”

Meanwhile, even users who have settled or obtained judgements against ezBtc say they have yet to see any money.  [Tyee]

  • Share:

Facts matter. Get The Tyee's in-depth journalism delivered to your inbox for free

Tyee Commenting Guidelines

Comments that violate guidelines risk being deleted, and violations may result in a temporary or permanent user ban. Maintain the spirit of good conversation to stay in the discussion.
*Please note The Tyee is not a forum for spreading misinformation about COVID-19, denying its existence or minimizing its risk to public health.


  • Be thoughtful about how your words may affect the communities you are addressing. Language matters
  • Challenge arguments, not commenters
  • Flag trolls and guideline violations
  • Treat all with respect and curiosity, learn from differences of opinion
  • Verify facts, debunk rumours, point out logical fallacies
  • Add context and background
  • Note typos and reporting blind spots
  • Stay on topic

Do not:

  • Use sexist, classist, racist, homophobic or transphobic language
  • Ridicule, misgender, bully, threaten, name call, troll or wish harm on others
  • Personally attack authors or contributors
  • Spread misinformation or perpetuate conspiracies
  • Libel, defame or publish falsehoods
  • Attempt to guess other commenters’ real-life identities
  • Post links without providing context


The Barometer

Are You Concerned about AI?

Take this week's poll