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In a dramatic turn of events, Coinsquare cryptocurrency exchange answered to manipulation charges. It's executives too pleaded guilty. The costs of the settlement is more than 2 million dollars, with job positions exit. The firm's deeds came to limelight at a closed hearing. This is a precedent act of enforcement. Many stakeholders congratulated the Ontario Securities Commission.

The firm's executives affected by this settlement include Cole Diamond, the president. Others are Virgile Rostand, the developer, and Felix Mazer, the chief compliance officer. Mr Felix Mazer resigned from his position on his own volition. He agreed to pay $50,000 in settlement to the Canadian regulator.  

The investigation 

All this came after a 10-month expedited investigation by the regulator. The regulator suspected the circumstances that drove QuadrigaCX out of business. QuadrigaCX is another Canadian-based crypto exchange firm.

It still collapsed even after maintaining its doors open for trade. Mr Diamond Cole admitted that the move to shut down QuadrigaCX was due to his unprofessionalism. That is why he had agreed to pay a settlement and relinquish his job position. He also reiterated the need to "fix and regulate the cryptocurrency market in Canada. 

Most players in the industry see Cole Diamond's move as expected of a business leader in 2020. That is, especially if you trade a volatile market commodity such as cryptocurrency. Cryptocurrency first hit the market in 2009 and has gained enormous prevalence since.

Bitcoin was the only block-chained currency, but that has since changed. Other Cryptocurrencies are also carving out space for themselves. These include Ethereum, Litecoin, Ripple, Stellar, among many others.

How much was Coinsquare charged in total

The settlement came in two main ways. Besides the executives paying the biggest amounts of money, the axe also fell on the firm. It paid $300,000 as part of the resources spent in the investigation by the OCS. Cole Diamond will pay $1 million in penalties while Virgile Rostand pays $900,000.

The top executives are also banned from influencing Coinsquare exchange for three years. The ban applies to all crypto exchange firms in the oversight of the Canadian regulator, OSC. They'll not score jobs in the region for the next three years. The chief compliance officer, Felix Mazer, also resigned from his role.  

What exactly transpired?

Ontario Securities Commission acted fast after a junior whistleblower made an anonymous tip. The manipulation was going on for long, but the executives chose to play an adamant ear to its workers. Coinsquare was more inspired by making profits than safeguarding its reputation.

It was one of a kind crackdown that revealed the booming wash trade in the firm. Traders regretted how the firm played them a fool between July 17, 2018, and December 4, 2019. Diamond's discretion and authority allowed the firm to inflate its activities.

The regulator noted that Coinsquare's deeds didn't go unnoticed. Clientele and other market players also smelt foul play. Yet, Diamond was too determined to conceal the wash trades more than anything.  Under his watch, a junior whistleblower lost his job for "bothering" the management.

The issue of inflation was becoming a nuisance for many employees. During the 18 months of wash trades, the fake trades topped the charts. They represented more than 90% of the accounted trading volume. The top management undermined the compliance culture of the Canadian exchange firm.

New dawn at Coinsquare

Coinsquare came into existence in June 2014 with its headquarters in Toronto, Canada. Its woes began after the demise of its founder, Gerald Cotton. The firm's actions have caused a head loss of US$125 million, affecting more than 76,000 investors.

Moreover, the OSC determined that Coinsquare conspired in financial crimes.  Its competitor, QuadrigaCX, operated like a halted Ponzi scheme after plunging crypto prices.

You should note that Coinsquare's application to the OSC has never been successful. That is the same case with the Investment Industry Regulatory Organization of Canada. New conditions are in place for its fresh application process.

This includes establishing an independent board of directors and appointing new CEOs. The firm must also create an independent internal whistleblower.

You must note that Coinsquare admitted to doing "wrong things" but not breaking the law. In a press release, the firm argued that its actions were "guided by legal advice." The trading of crypto assets on its Platform was not subject to Ontario securities law.

That statement is true to that extent. The firm hopes to resolve that through a successful application process.

What is market manipulation? What is its evidence?

The term market manipulation is becoming popular across the cryptocurrency mainstream. Traditional finances also suffer the same. However, spotting it in cryptocurrency is harder. Cryptocurrency is a  liquidated digital asset with no central global regulatory commission(s).

That is unlike fiat currency. Most cryptocurrency whitepapers aim at eliminating the regulators.  They also cut the financial institutions as much as possible. Thus, the existing regional regulators only remain to do the "oversight" role. Studies place about 88% of the top 25 crypto exchange firms in manipulative positions. 

Here are the common types of typical manipulation to look out for:

·Wash trading

Wash trading is the most common type of manipulation. It is the same thing that happened at Coinsquare. A firm buys and sells a security at the same time. This is to create an artificial and misleading activity or image in the marketplace. 

Whale manipulation

In whale manipulation, small traders close their trading positions at a loss. Heavy-weight crypto-assets traders lure them into short positions only to buy them out.

Freezing assets on the Platform

In this case, firms and hackers may collude to claim a hacking attempt. That will see the freezing of all crypto assets in the system, manipulating their prices.

Staging a system breakdown

This one has also been more prevalent than ever. An exchange will claim a 51% hack to take all the traders' money and enrich it plus the shareholders.

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