Ontario Securities Commission accuses Coinsquare of market manipulation

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Posted on: July 17, 2020 11:00 pm EDT

Coinsquare Limited, a popular cryptocurrency exchange based in Canada, has been accused of market manipulation by the Ontario Securities Commission (OSC). The OSC claims that Coinsquare illegally conducted wash trades to artificially increase trading volume on its platform. In addition, the OSC claims that Coinsquare retaliated against a whistleblower who brought these infractions to light. None of these allegations have been proven in court.

The OSC announced today that it will conduct a hearing on Tuesday, July 21 to discuss tentative settlement agreements with Coinsquare Limited and three of the company’s executives, namely President and Founder Virgile Rostand, Chief Executive Officer Cole Diamond, and Chief Compliance Officer Felix Mazer. The OSC has not yet made the terms of the settlement agreements public, but they are subject to approval by an OSC panel of commissioners.

In an allegations statement by the OSC, enforcement staff noted that they brought these allegations against Coinsquare Limited and its staff forward to “hold them accountable for their misconduct and to send a message to other market participants in the crypto asset sector that deceptive conduct will not be tolerated in Ontario’s capital markets.”

In the same allegations statement OSC staff noted, “Coinsquare engaged in market manipulation through the reporting of inflated trading volumes.” The OSC also accused Coinsquare of misleading customers and noted the CEO Cole Diamond and President Virgile Rostand retaliated against the whistleblower who exposed the company’s practices. According to OSC staff, as much as 90 percent of Coinsquare’s trading volume from July 2018 to December 2019 were the result of wash trades.

Last month, Vice published leaked correspondences that implicated the CEO’s involvement in Coinsquare wash trades. Coinsquare’s alleged violations occurred at the same time as the company was in discussions with OSC to register its Coinsquare Capital Markets Ltd subsidiary.