CoinIQ

ezBTC Review – Ongoing Lawsuit, Opaque Practices Give Cause for Concern

ezBTC in Brief

ezBTC is a controversial Canada-based cryptocurrency exchange that claims to be “the fastest exchange in Canada.” It supports bitcoin, several major altcoins as well as wire transfers and in-person cash and bank card deposits. Questions about the exchange center around its unwillingness to provide information about its financials and its founders. In addition, an ongoing lawsuit is another cause for concern.

Keep reading for an in-depth analysis of ezBTC. We’ve collected all the known facts about the exchange so that you can make an informed decision.

Pros

  • Live chat and phone support.
  • Fast withdrawals.
  • Support for many popular altcoins.
  • Support for Interac transfers.
  • Verification can be completed in 12 hours or less.

Cons

  • One of ezBTC’s early investors is suing the company for 284.2566 bitcoin ($2.3 million Canadian dollars) plus punitive damages.
  • Questions surround the bitcoin savings account feature.
  • Only Canadians can deposit and withdraw fiat funds.
  • Founder has no financial service or coding experience.
  • Information about ezBTC’s other leaders is not available.
  • The ezBTC website contains incorrect information.

What is ezBTC?

History

There’s very little information about ezBTC’s backstory online. According to ezBTC founder David Smillie’s LinkedIn page, the exchange opened its doors in June of 2016.

A few months ago, ezBTC founder David Smillie posted the following announcement to LinkedIn:

“ezBtc has opened it’s doors to the public. Last week we had our grand opening of ezBtc East located in midtown Toronto, you can get more details here. Open Mon-Fri 11-6.”

He also shared a few details about ezBTC’s goals during a Reddit AMA.

“Once achieve proof of concept here in Toronto we intend to have Brick and Mortar offices in every major city across Canada, it’s really good to put a face to an online name and that goes both ways for us and for our members.”

After establishing a base in the major Canadian cities, ezBTC plans to expand into other countries.

“We plan to stick to our Canadian roots and not deviate from our community style, but do have a global agenda in our business plan. One step at a time right?”

Leadership and investors

  • David Smillie – ezBTC Founder and President. Smillie writes most of the posts for his exchange’s official Reddit account, ezBTCadmin. He has no experience in the financial services world and he’s not a coder either. According to Smillie’s LinkedIn bio, Smillie was a freelance video editor before he decided to open a cryptocurrency exchange. Before that, he helped his father with his real estate business, G. Smillie Holdings.

Smillie’s father is a real estate developer named Graham Smillie. The about section of the G. Smillie Holdings website indicates that “sons David and Kevin assist with the operation and running of various projects.”

There’s no information available online regarding where ezBTC received the money it needed to launch the ezBTC exchange.

On Reddit, Smillie claimed that the exchange’s savings fund feature is main reason why ezBTC did not have to seek out venture capital investors prior to opening its doors. ezBTC users can apparently earn 9% interest if they store their assets on the ezBTC platform.

“I can update everyone on how we currently use use savings funds and that is to simply add liquidity without needing to go a tradition vc route. We would rather reward our members then a random vc.”

It’s not clear how this savings account program allowed ezBTC to do without venture capital funding. Daily interest payouts accrued through the savings fund amounts to a 9% yearly interest payout for every participating ezBTC user. It is an expensive feature for ezBTC to maintain.

Protecting customers’ coins

Legal and regulatory compliance

In Canada, the regulatory situation around cryptocurrency companies is still unclear. Though Canadian cryptocurrency companies aren’t required to conform to the same standards as financial service companies, many choose to follow typical financial service best practices anyway by implementing some type of ID verification system and an AML (Anti Money Laundering) policy.

ezBTC’s AML policy is typical. The exchange claims to have hired a compliance officer, but no specific names are mentioned anywhere on the ezBTC site. ezBTC’s privacy policy is also very similar to the policies that other cryptocurrency exchanges use.

Though ezBTC users don’t have to verify themselves, unverified ezBTC users can’t do much on the exchange except deposit and withdraw cryptocurrency.

Coin listing policies

No specific information about how ezBTC evaluates altcoins is available on the exchange’s website. However, an ezBTC knowledge base article advises ezBTC users research an altcoin thoroughly before investing in it:

“As with all cryptocurrency transactions, ensure that you don’t rush into a decision and do your homework.”

Network security

ezBTC has never experienced a hack that gained media attention. A knowledge base article describes some of the exchange’s security safeguards.

“We are proud to use innovative proprietary technology to hold 99.99% of coins including those used for payments in cold storage. This means that in the extremely unlikely event that we are compromised, your assets will be safe with us.”

The article goes on to explain that ezBTC’s manual system of processing payments is the reason why the exchange doesn’t offer instant withdrawals. That information is out of date, though, because ezBTC rolled out instant withdrawals in May of 2018.

ezBTC’s new withdrawal system has a number of security-related limitations:

  • The amount you withdrawal must be under 0.15 BTC.
  • You can only initiate one fast withdrawal every 8 hours.
  • You must be a “fully verified and a trusted user.”
  • If the wallets run out of funds, ezBTC users have to wait for an admin to refill them manually.

Customer support

In addition to standard customer support options like a self-service ticket system and a knowledge base, ezBTC users can also contact the exchange via live chat or reach out over the phone. In addition, ezBTC has two offices: one in Vancouver and one in Toronto. Those who want to meet an ezBTC representative face to face have to schedule an appointment in advance.

ezBTC reputation

It’s normal for a cryptocurrency exchange to have PR issues. Last year, interest in cryptocurrency skyrocketed when the price of bitcoin surpassed $10k. Crypto exchanges struggled to keep up with the influx of new users. As a result, the internet is full of cryptocurrency exchange complaints. Many of those complaints were generated by users that were unfamiliar with how cryptocurrency trading works.

With all that being said, there are several notable red flags around ezBTC:

The suspicious “savings account” feature

ezBTC savings accounts grow 9% each year. But how? This feature brings to mind BitConnect– a ponzi scheme that promised its users a 1% daily return on their investments. ezBTC’s promises are far more modest. But still, how can ezBTC afford to give each of its users 9% more cryptocurrency each year? Until ezBTC provides more details about how the savings account feature works, it will continue to draw scam accusations.

Lack of info about the ezBTC team

Running a cryptocurrency exchange is a complicated task. That’s why cryptocurrency exchanges typically hire expert coders, legal professionals and banking experts. However, there’s no information about the ezBTC team on the ezBTC site. The only known ezBTC executive is founder / former video editor David Smillie.

An early investor is suing ezBTC

This lawsuit alleges that ezBTC borrowed 20 BTC from an early investor named Richard Godwin and never paid it back. Ten months ago, Smillee posted the following comment about the lawsuit to Reddit:

“I’m supposed to not say much about the lawsuit but I believe this is public record. My dad was finally dropped from suit recently which is a huge weight off him. He’s the most generous and honest guy I know and has a stellar reputation in our small community he really didn’t deserve having his name dragged thru the mud for doing nothing and for so many months. Here’s to all the great dad’s out there.”

If Godwin wins the lawsuit, ezBTC will have to pay him 284.2566 bitcoin (roughly $1.8 million USD in today’s bitcoin prices) plus punitive damages.

How to Join ezBTC

Who can join?

Anyone can join ezBTC, but only Canadian residents can complete ezBTC’s verification process. Unverified ezBTC users can still trade cryptocurrency, but they can’t deposit or withdraw fiat funds.

Verification

Individual accounts

ezBTC’s verification process requires three documents and a selfie:

  1. A photo of a government-issued Canadian ID card, driver’s license or passport.
  2. A bank statement. You have to prove that you own a Canadian bank account.
  3. Proof of residence. Acceptable documents include electric bills and utility bills. (Your bank statement can also be used to satisfy this requirement.)
  4. A selfie. You have to take a picture of yourself holding your driver’s license, passport or government-issued ID.

Business accounts

ezBTC requires businesses and corporate customers to fill out additional paperwork. This knowledge base article provides a few details about what’s required:

“To open a corporate account with us, first complete the standard personal verification steps. Once approved as a personal account, please email [email protected] as we will require company documents and there is a questionnaire to fill out. Expect an additional 12 hours to verify your corporate documents.”

What Can You Trade on ezBTC?

Cryptocurrencies

ezBTC claims that it supports over 50 altcoins on its homepage. However, the ezBTC interface only lists 20 coins: ZRX, REP, BCH, CVC, DASH, DCR, DGB, ETC, ETH, FCT, GNT, LTC, OMG, XRP, STORJ, ZEC, BTG, RHOC, WTC and XLM.

altcoin
Source: CoinIQ 

Fiat currencies

The only fiat currency that ezBTC supports is the Canadian dollar.

Currency exchanges

In order to buy an altcoin through ezBTC, you have to first purchase bitcoin. Once you have some bitcoin, you can then buy altcoins through a beta feature called ezALT.

Advanced trading

ezBTC is a beginner-focused exchange. The interface limits you to purchasing bitcoin and a handful of different altcoins. There’s no way to customize your order, buy on margin or short a cryptocoin.

ezBTC does offer a publicly accessible API, but it has very limited features:

“We are currently working towards a full API release. In the meantime, we offer a read-only API. Current supported trading pairs: ‘xbtcad’.”

Trading Tools and Fees

Trading interface

ezBTC’s core interface is simple. The dashboard gives you a high level view of what’s in your account. The box on the left side of the page gives you the ability to place buy and sell orders.

dashboard 2
Source: CoinIQ

The Save button on the top of the dashboard lets you transfer bitcoin to ezSave. Deposits allegedly earn 9% annual commission each year. Moving money out of ezSave takes 14 days.

ezsave
Source: CoinIQ

ezBTC’s altcoin interface is still in beta. The Get a Quote functionality doesn’t seem to work. Though the ezBTC website advertises support for 50+ altcoins, the drop-down menu for purchasing altcoins only lists 20 coins.

ezalt
Source: CoinIQ

Mobile app support

ezBTC doesn’t have any official apps. Apps that claim to be ezBTC compatible may be scams.

Deposits and withdrawals

Deposits

Like QuadrigaCX, ezBTC accepts cash deposits. This feature is only available in Vancouver and Toronto, and likely requires a visit to an ezBTC office.

Bitcoin and altcoin deposits are free, but altcoin deposits take longer to process than bitcoin deposits.

Interac and cash deposits incur a 1.5% fee. That fee is high compared to Kraken, which offers free CAD bank deposits. On the other hand, ezBTC competitor Coinsquare charges 2.5% for Interac deposits.

deposits
Source: CoinIQ

Withdrawals

ezBTC’s withdrawal fees aren’t unfair, but they’re not very competitive either. The fee for Interac withdraws is $20, which is double what Kraken charges. Coinsquare charges a 2% fee for Interac withdrawals, which could be less or more depending on how much you want to take out.

Apparently there is a “variable” fee for withdrawing BTC. Does this cover mining only, or is there an additional withdrawal fee that goes to ezBTC? There’s no way to know for sure, given the information provided in the table.

withdrawals
Source: CoinIQ

Transaction fees

The ezBTC website states that it charges a flat 0.3% rate for all trades that involve bitcoin. This means that all cryptocurrency trades incur a 0.3% fee. As mentioned above, ezBTC doesn’t support altcoin-to-altcoin trades. All cryptocurrency trades must flow through bitcoin.

Final Word

ezBTC aims to be a speedier, more reliable way to buy and sell cryptocurrency compared to its Canada-based competitors. However, ezBTC likely won’t go far if the many questions plaguing this exchange remain unanswered.

For new traders

ezBTC’s interface is easy enough to use for buying and selling bitcoin, but the altcoin trading feature is very clunky. Another potential problem for newbies is ezBTC’s website, which contains unclear and out-of-date information. On the other hand, few other crypto exchanges offer both phone and chat support.

For advanced traders

Advanced cryptocurrency traders are clearly not ezBTC’s target demographic. Competing exchanges offer lower fees, the ability to place custom orders and better altcoin support.

Alex Munkachy

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