Canadian Regulator Accuses Coinsquare Of Wash Trades Worth 590k Bitcoins

Canadian regulator accuses Coinsquare of wash trades worth 590k Bitcoins. On Thursday, The Ontario Securities Commission (OSC) published the Statement of Allegations made by its Enforcement Branch staff in a proceeding against Coinsquare Ltd. and its executives.

According to the OSC staff, Coinsquare “engaged in market manipulation through the reporting of inflated trading volumes,” “misled its clients about trading volumes,” and “took a reprisal against an internal whistleblower.”

At the direction of the CEO, Rostand created an algorithm, which was implemented on July 17, 2018, “to inflate the trading volumes reported on the Coinsquare Platform (the Market Volume Function).”

The regulator alleges “Between July 17, 2018, and December 4, 2019, the Market Volume Function resulted in approximately 840,000 wash trades on the Coinsquare platform, with an aggregate value of approximately 590,000 bitcoins. The wash trades represented over 90% of the trading volume on the Coinsquare platform during this period”. 

The OSC staff also alleges that Coinsquare then misled its clients and the public about its inflated volumes of trading and continued its practice of washing trading, even as its employees raised concerns about the matter.

The company hired an “internal whistleblower” to work on its automated trading strategy team in November 2018 but was fired on Dec. 3, 2019, after he repeatedly raised concerns about inflated trading volumes using the Market Volume Function.

Coinsquare additionally concealed its wash trading practice from the OSC. This includes when Coinsquare Capital Markets submitted applications for registration as an investment dealer and to operate an Alternative Trading System with the Commission and the Investment Industry Regulatory Organization of Canada (IIROC) in early 2019.

The OSC says that “Coinsquare’s failure to implement adequate controls over trading activities as set out above was contrary to the public interest.”

[image: Hermes Rivera]

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