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Cole Diamond Square CEO facing wash-trading accusations

Cole Diamond Square CEO

June 16, 2020 | 

JOHN K MWANIKI |  0 Comments| 

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Get Into Cryptocurrency Trading Today

Coinsquare, one of the leading crypto exchanges in Canada, is in a crisis after reports indicated that the platform is involved in wash-trading. Even though first suspected in 2018, it is not until 13th June when the confirmation of the extent of the malpractice came to light.

According to Vice, the company used wash-trading to inflate the trading in the platform as a show of intense activity. The increased activities would, in turn, manipulate the asset prices in the platform. The report obtained from the company’s communications shows the CEO as culpable.

Employees Uncomfortable with The Malpractice  

While wash-trading in the company seems to have spread deep in the company, reports indicate that most of the employees were opposed to it. Several communications with over 5000 exchanges in emails and slack showed exchanges among the employees detailing that they were against such trading.

In one of the exchanges, the CEO seems to be angered by an indisciplined employee. The employee is accused of having disabled one of the wash-trading codes. The move was apparently to evade the Ontario Securities Exchange (OCS). The CEO then orders the employee to turn back on the system.

The History of Wash-trading in Cryptocurrency

Wash-trading is not new in the crypto world. The vice has been so rife with research by The Wall Street Journal, proving that up to 67% of the market trading was illusionary. A study also found that some of the cryptocurrencies operate on around 99% false figures.

The prevalence of wash-trading has raised incredible concerns in the financial markets. At some point, it seemed like cryptocurrency was the next frontier in the money market. The rates of trading had risen so much, and it seemed the world was embracing the new coins until the extent of wash-trading came out.

The leading crypto, Bitcoin, has also been party to the suspect trading. A bot called spoofy was found in 2017 to make artificial orders leading to an increase in the value of the coin.

It goes into marketing tactics as well. Some crypto companies edit celebrity videos to show them endorsing the product. When in the real sense, the celebrities are not involved.

For now, the different financial regulatory bodies are doing everything possible to ensure stable markets devoid of wash-trading. Even though the OCS is yet to confirm whether it will launch investigations into the conduct of Coinsquare, it is early to make conclusions.

Other Possible Malpractices in Cryptocurrency

After the news on the wash-trading, investors are wondering what more they might be facing by investing in cryptocurrencies. The primary concern that comes with crypto is the low-level regulations. Unlike the other traditional currency, where the governments had complete control, cryptocurrency comes with autonomy.  

The government and other international regulatory bodies have no control unless the trading platform operates in forex or securities exchange. That is not to say Bitcoin and other cryptocurrencies are not ideal investments. An investor only has to do due diligence before placing their money on any asset.

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