Canadian financial watchdog, Ontario Securities Commission (OSC), is accusing Coinsquare crypto exchange of market malpractices with a hearing on this case set for July 21. According to the OSC, CoinSquare took part in market manipulation activities by giving a false picture of trading volumes to its clients'.
The regulator goes on to detail that CoinSquare engaged in what is dubbed as ‘wash trading' in the financial markets' scene. This activity involves the creation of false large in-house orders to manipulate trading volumes while, in reality, no assets change hands. OSC has since put Coinsqaure's CEO Cole Diamond, founder Virgile Rostand, and CCO Felix Mazer to the task and are set to appear as respondents in the case.
In its filing, the OSC says that Diamond instructed Rostand to mess with trading volumes in early 2018. It was then that the Coinsquare founder came up with a solution, pegging the fundamentals on wash trading. Consequently, the exchange carried out over 840,000 wash trades, which saw 590,000 BTC change hands between mid-2018 and December 2019. Notably, this was over 90% of the exchange's volume at the time.
The OSC further highlights that Coinsquare took no action despite concerns from staff during this period. In fact, at one time, the regulator asked for Coinsquare's financial records and the firm failed to report any irregular activity citing that it is,
“taking steps to prevent market manipulation and highlighted controls it claimed could help detect such conduct.”
Also, the CoinSquare Exchange is said to have terminated one of the whistleblowers after it emerged that OSC had tabs on them. Coinsquare has since maintained that it did not engage in market manipulation.