stub Ontario Securities Commission Alleges Coinsquare Committed Various Securities Violations - Securities.io
Connect with us

Regulation

Ontario Securities Commission Alleges Coinsquare Committed Various Securities Violations

mm
Updated

The Ontario Securities Commission (OSC), a Canadian regulatory body tasked with ensuring fair and transparent markets, has released a detailed set of allegations against Coinsquare.

In its allegations, the OSC purports that Coinsquare knowingly took part in ‘wash trading’ for an extended period.  In doing so, Coinsquare was knowingly in clear violation of various securities laws.

What is Wash Trading?

Wash trading is an illegal practice that refers to the purposeful manipulation of trading markets, by way of buying and selling shares to artificially inflate the trading volume and pump up the share price.  Trading volume is important to traders, as high-trading volumes typically align with asset liquidity and value.

By taking part in wash trading, the offender is intentionally misleading traders.  Exchanges often choose to do it regardless, as they attempt to attract new business to their platforms.  More volume = greater liquidity = enticing to traders.

While not as prevalent as in past years, wash-trading has unfortunately been a common practice among many cryptocurrency exchanges.  Much of this was due to the unregulated nature of these exchanges in the early days of the industry.

Statement of Allegations, The Details

In its ‘Statement of Allegations’, the OSC provides a detailed breakdown of the various violations by Coinsquare.  In addition to simply wash-trading, the OSC indicates that the practice of wash-trading was well known among those in charge at the company.  More specifically, the OSC names the following individuals as being responsible for the practice.

  • Founder, Virgile Rostand
  • CEO, Cole Diamond
  • CCO, Felix Mazer

If the act of market manipulation was not enough, the OSC also indicates that an employee who brought forward knowledge of the wash trading to company executives was told by those same executives to continue wash trading.  Coinsquare is believed to have then taken reprisal against this employee.

A Timeline, According to the OSC

  • March 2018
    • Cole Diamond orders wash-trading to commence
  • July 2018
    • Coinsquare representatives publicly deny practices on various online forums
  • March 2019
    • Employees raise concerns about wash-trading practice to management
  • December 3, 2019
    • OSC completes unscheduled visit to inspect Coinsquare headquarters
  • December 4, 2019
    • Wash-trading is halted

During the time period when the wash-trading occurred, the OSC states that 90% of Coinsquare's volume was faked.

Coinsquare

Founded in 2014, Coinsquare is a cryptocurrency exchange, headquartered in Toronto, Ontario.  Through its services, clients can buy/sell, trade, and cash out various cryptocurrencies.

CEO, Cole Diamond, currently oversees company operations.

Ontario Securities Commission

The OSC is a regulatory body based in Ontario, Canada.  The OSC is tasked with ensuring fair and transparent markets for companies and investors by enforcing compliance with the governing rules and regulations.

Grant Vingoe is the current Acting Chair and CEO of the OSC.

In Other News

Coinsquare and QuadrigaCX represented, arguably, the most well-known Canadian cryptocurrency exchanges.  Unfortunately, each has dealt with its own share of controversial issues, with only Coinsquare remaining operational to date.

For those interested in an alternative, the upcoming cryptocurrency trading through WealthSimple has the potential to become a leader in the space.  WealthSimple has developed a positive reputation in its time operating as a financial service provider, and is expected to deliver a polished, and transparent service.  To learn more about this upcoming service, make sure to read our recent article detailing what it will entail.

Advertiser Disclosure: Securities.io is committed to rigorous editorial standards to provide our readers with accurate reviews and ratings. We may receive compensation when you click on links to products we reviewed.

ESMA: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Investment advice disclaimer: The information contained on this website is provided for educational purposes, and does not constitute investment advice.

Trading Risk Disclaimer: There is a very high degree of risk involved in trading securities. Trading in any type of financial product including forex, CFDs, stocks, and cryptocurrencies.

This risk is higher with Cryptocurrencies due to markets being decentralized and non-regulated. You should be aware that you may lose a significant portion of your portfolio.

Securities.io is not a registered broker, analyst, or investment advisor.