Coinshare faces market manipulation allegations from OSC

Crypto trading platform Coinshare is accused of inflating trading volumes illegally and is under investigation by the OSC.

By · Jul 18, 2020 . 4min read

Source – Unsplash

According to SarniaThisWeek, the Ontario Securities Commission (OSC) has accused cryptocurrency exchange Coinshare of engaging in illegal trading activities. The OSC alleges that Coinshare inflates trading volumes on it’s platform by conducting ‘wash trades’.

A representative from Coinshare has stated that they are working with OSC to reach a settlement. The settlement meeting will take place next Tuesday. The terms of the meeting are not known yet. A panel of OSC commissioners must approve this.

Wash trades are essentially intended to have the effect of making it seem like the trading volume is much higher than it actually is. In a wash trade, the buyer and the seller are the same. The trade is executed but not with the intention of taking a position on the market. By increasing the trading volume, false interest is generated in a particular commodity. The increased trading volume might compel investors to get involved.

The OSC has stated that Coinshare CEO Cole Diamond authorized the trades and knew what was happening. They also allege that wash trades represented over 90% of Coinshare reported trading volume between July 2018 and December 2019.

An employee from Coinshare raised alarm about the suspicious trading activity with senior executives within the company. Coinshare placed him on stress leave at first. A few months later, they fired him. All this happened while Coinshare was in talks with the OSC about registering it’s subsidiary Coinshare Capital Markets Ltd.

The company has stated that the practice had no real impact on it’s clients. They assert that their platform has always reflected fair market prices. They have also stated that their firm takes full responsibility and will fully cooperate with the OSC.

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