The CEO of Coinsquare, a crypto exchange based in Canada, has been blamed for masterminding wash trades. This started after it was reported that some documents, which were once hidden about this act were found.
Wash trading is a crime defined by the securities law. Unfortunately, Coinsquare has found itself in a serious mess following the allegation that it was involved in this by the actions of the CEO.
Wash trading is considered illegal because it aims at manipulating the market. When a company does wash-trading, it buys some financial instruments and sells it almost simultaneously, thereby making it look as if it has a large trade volume. This is fake because the assets do not change hands.
Cole Diamond, the CEO of Coinsquare, is said to have sent emails and messages to this effect. On June 13, Vice reported the accusation stating that these leaked documents were the major footholds for the accusers.
The documents may have been leaked by the hackers who gained access to more than 5,000 email addresses after a SIM-swap attack some days ago.
Coinsquare accused for stating false volumes
The evidence seen from one of the leaked emails in March records the account of one of Coinsquare’s employees who was apparently unaware of the wash-trading activity orchestrated by the top officials and therefore decided to turn off the code that was used in the manipulation.
It was reported that when Cole got to know this, he ordered that the code be turned back on.
According to the report, Cole made it clear to everyone to continue the act of wash-trading. It also stated that some of the senior staff tried to discontinue the use of the term, “wash-trade,” in their emails to avoid being caught if their plans were leaked.
Traders account that they have been suspecting trade volume manipulations by Coinsquare since 2018. Some of these concerns were expressed on Reddit.
Other crypto exchanges may be guilty
Since the Willy trading bot of Mt Gox was exposed in 2014, traders have become more alert at the possibilities of market manipulation by wash-trading among exchanges.
In 2019, it was reported that no less than 95% of the volumes sent to CoinMarketCap were false.
Since Binance acquired CoinMarketCap in April, some of the loopholes that would allow exchanges send manipulated results have been covered.
However, many involved are accusing CoinMarketCap of creating parameters that favor Binance when reporting trade volumes.