- Ontario Securities Commission has summoned the cryptocurrency exchange platform, Coinsquare Ltd, for carrying out market manipulation activities.
- The manipulation activities involve inflating trading volumes by carrying out wash-trades.
- All the charges by OSC mentioned are yet to be proven in front of the committee.
Ontario Securities Commission has summoned the cryptocurrency exchange platform, Coinsquare Ltd, for carrying out market manipulation activities. Additionally, charges also levelled for coercing and firing a whistleblower who acted judiciously in reporting the fraud. Headquartered in Toronto, Canada, Coinsquare Ltd. was founded in 2014 by Virgile Rostand. The manipulation activities involve inflating trading volumes by carrying out wash-trades.
Chronology of events that took place in the malicious practices
In discussion with OSC Launchpad team member, Coinsquare pushed for a registration certificate to allow them trading with securities and derivatives. After the meeting, Rostand performed an algorithm to inflate trading volumes on the instructions of the CEO Cole Diamond. The trading volumes inflated from June 2018 up until December 2019 that accounted for more than 90% of the trades carried out on the platform.
Soon, third-party agencies started taking the inflated numbers to display it to the masses. Consequently, questions raised about the increased traffic on the platform. In its defence, Coinsquare exclaimed that it could be the work of ‘Robo-traders’ and that they do not indulge in such practices. The crypto assets purchased and sold on the platform were controlled internally on their wallets. Transactions posted on its ledger leading to increased trading volumes.
Coinsquare Ltd is innocent until proven guilty
Yes! All the charges by OSC mentioned above yet to be proven in front of the committee. Per Charges, the practices of coinsquare were against the interests of the investors. Furthermore, the reprisal of a whistleblower in December 2019 is proof that something was wrong at the organization. They failed to implement necessary controls to prevent such fraudulent activities—misleading orders placed to inflate numbers just before its registration as an investment dealer in Ontario.
The Ontario Securities Commission has summoned the CEO Cole Diamond, along with its founder Virgile Rostand, and Felix Mazer in connection with the case. The hearing will take place on 21st June 2020 to decide whether to go ahead with a settlement agreement with the organization or not.