Coinsquare Accused Of Market Manipulation With 840K Wash Trades; 590K Bitcoins


The Ontario Securities Commission has filed legal proceedings against cryptocurrency exchange Coinsquare and its executives accusing it of market manipulation and misleading clients about trading volumes. The company is said to have manipulated the market with 840,000 wash trades amounting to around 590,000 bitcoins.

Coinsquare executives accused of wash trading

Coinsquare is accused of engaging in practices contrary to Ontario security laws through wash-trading and reports of a hack.  The company’s founder Virgile Rostand, CEO Cole Diamond, and chief compliance officer Felix Mazer have been named in the lawsuit as respondents.

Coinsquare launched in 2014 has its offices in Toronto. The trading platform had around 235,000 accounts as of Dec. 14, 2019. According to the regulator, Coinsquare has not been registered with the commission. 

The company’s CEO is accused of ordering creation of an algorithm to inflate company’s trading volumes on its platform. This, according to the regulator, resulted in around 840,000 wash trades valued at around 590,000 bitcoins. Coinsquare is also accused of misleading its clients about inflated trading volumes by continuing with wash trading even as employees raised concerns. The company is said to have hired an “internal whistleblower” to work on its automated trading strategy. The whistleblower was fired in 2019 after he raised concerns about the inflated trading volumes.

Holding market participants accountable

In a statement, the regulator said the charges against Coinsquare will make the company accountable for their mistakes and send a message to other market participants in the crypto industry. OSC further noted that the crypto company has been working with regulators to settle and create a secure path for the company to continue its operations. According to regulator, this will involve obtaining registration and being registered as an Alternative Trading System. The company has since taken full responsibility for the misconduct and is cooperating with regulators.

The OSC investigated and eventually prosecuted the matter following a report in June that accused Coinsquare of inflating its trading figures. The report resulted from leaked emails that showed the company is involved in wash trading.  


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