The Canadian regulator The Ontario Securities Commission (OSC) has accused the besieged Coinsquare of manipulating the market and misleading clients about trading volumes.
The OSC alleged that Coinsquare, which has been accused of offloading and hacking reports, “behaved in violation of Ontario security laws.” The regulator also named founder Virgile Rostand, CEO Cole Diamond and chief compliance officer Felix Mazer as respondents.
A hearing into the case will take place on July 21.
In its complaint, the OSC said Diamond ordered Rostand to inflate trading numbers in March 2018. Rostand then came up with a solution that allowed the exchange to start “washing” trading. Wash trading refers to the artificial swelling of trading volumes by executing large trades in the market in their own orders, so it looks like big trades have taken place but no assets have changed hands. Between July 17, 2018 and December 4, 2019, Coinsquare completed around 840,000 wash transactions with a total value of around 590,000 Bitcoins, the OSC said. These represented more than 90% of the volume of transactions on the stock market.
Despite staff concerns, Coinsquare continued its wash-trading activities and thus manipulated the market and consumers, the OSC said. The regulator requested information on the exchange’s trading activity, but Coinsquare did not report any irregularities and said it was “taking measures to prevent market manipulation and stressed that the controls which it said , could help to detect such behavior ”.
The OSC also said that Coinsquare ended an internal whistleblower after the employee raised concerns about washing trading.
Reddit users have been wary of Coinsquare activity in two different cases. Vice also reported document leaks showing diamond order