The Ontario Securities Commission has asked Coinsquare’s CEO, President and COO to relinquish their positions.
There will be a new CEO, President and COO for Coinsquare after the former officers were charged with wash-trading. Cole Diamond (CEO) and Virgile Rostand (the president) have also been fined $1.6 million by the commission.
The OSC pronounced yesterday, July 21, that Cole Diamond and Rostand agreed to quit their leadership positions in Coinsquare. While Diamond will pay $750,000 fine, Virgile is to pay $670,000. The cost of investigating this case was up to $223,000 and the two outgoing officials will support Coinsquare in paying for it.
Following the ban of Diamond and Rostand, they can no longer work as “registrants and directors or officers of a registrant” for a minimum of three years. Felix Mazer who was the COO has settled his fine of $37,000 and will face a similar ban for one year.
July 16 marked the beginning of the end for these three officials. That was the day the OSC accused Coinsquare for wash-trading. Wash-trading is usually employed by exchange companies to create a false impression of activities in the market when they are the ones increasing the trade volumes.
Jeff Kehoe of the commission said:
“Despite several employees raising concerns about inflated trading volumes, Coinsquare not only stuck with the practice, but lied to investors about it and retaliated against a whistleblower.”
“Being an innovator in our capital markets is not a free pass to disregard Ontario securities law,” he added.
Coinsquare didn’t deny the allegation that it was involved in manipulating the market. It also admitted that it tried to cover up the acts by lying.
More than 90% of the trade volume reported by Coinsquare was from the acts of wash-trading. For 17 months (July 2018 to December 2019), there were 840,000 wash trades valued at 590,000 BTC (about $5.5 billion).
Wash-trading has become a thing to worry about in the crypto industry. Bitwise Asset Management told the U.S. SEC in May last year that only about 5% of trading volumes reported to CoinMarketCap were not influenced by wash-trading. The Blockchain Transparency Institute also stated last year that half of BTC trade volume globally was influenced by wash-trading.