Canada’s Coinsqaure accused of staging wash-trade; documents leaked: Report

Canadian cryptocurrency exchange Coinsquare

In a major setback for Canadian cryptocurrency exchange Coinsquare, media reports have emerged indicating that the platform has been instrumenting a wash-trading scheme to bolster volume. According to a report published by Vice’s Motherboard, leaked emails, Slack chats and other files have been obtained by the publication indicating Coinsquare CEO Cole Diamond’s involvement in the illegal wash-trading for inflating the currency. Canada-based Coinsquare enables its users to trade Ethereum, Bitcoin, and other digital currencies. 

Wash-trading refers to a process of market manipulation wherein an investor exchange the same financial asset to artificially inflate trade volume in the marketplace. Due to its tendency of price manipulation, wash trading is illegal and violates the securities law. Notably, the practice often takes place in the cryptocurrency world but due to the lack of evidence remains unreported. 

As per the documents access by Vice Motherboard, Coinsquare CEO Cole Diamond has been pushing the employees to indulge in wash-trading practice particularly during 2018 and 2019. However, the evidence has shown employees expressing reluctance to carrying forward with the illegal practice. 

Reportedly, there have been certain indications, such as hiding real trading statistics, in the past few months suggesting something wrong with Coinsquare. The email exchanges have also proposed that Coinsquare employees, in their discussions, have expressed concerns about the risks relating to the practice of wash-trading in the cryptocurrency market. 

This development has come days after Coinsquare confirmed that its customer data was stolen from the Service System by an ex-employer of the company a year ago. Once the theft was detected, affected users and data protection and law enforcement authorities were informed about the breach. 

Considered an illegal practice under the United States securities law, wash trading help in artificial boosting of trading volumes, making them look bigger to other traders. Earlier this year, Canadian securities regulators published additional guidance indicating that most of the country’s platforms that facilitate the buying and selling of crypto assets may fall under the national securities laws.

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