Coinsquare settles with OSC to the tune of $2.2million

Crypto exchange Coinsquare admitted to the accusations made against it by the OSC and agreed to pay out $2.2 million in fines.

By · Jul 22, 2020 . 5min read

Coinsquare concluded its settlement meeting with the Ontario Securities Commission (OSC) and agreed to pay $2.2 million. This was however announced through a press release by OSC. The company will pay the fine in terms of sanctions and costs. Additionally, the OSC handed out industry bans.

The OSC accused Coinsquare of conducting ‘wash trades‘. The purpose of these trades are to inflate the trading volume. The buyer and seller are usually the same people. They do not take a position in the market. The OSC found that Coinsquare’s internal algorithm generated 840,000 wash trades (590,000 of which were in Bitcoin), which represented 90% of its trading volume between mid-2018 and 2019.

The senior management knew what was going on and even authorized it. When an employee raised questions, the management promptly fired him from the company. Coinsquare’s executives admitted to all the charges levied against it.

The “Wash Trade” aftermath

CEO Cole Diamond and CTO Virgile Rostand both agreed to hand in their resignations. In addition to this, Diamond will have to cough up $1 million in penalties while Rostand agreed to $900,000. Both will have to pay $300,000 in respect to the staff’s cost of investigating the matter. The OSC banned both executives from participating in Coinsquare’s management for the next 3 years. The CCO of Coinsquare, Felix Mazer, made a voluntary payment of $50,000 to the OSC.

Apart from the fines and bans from working with Coinsquare, the three executives are also banned from holding directorial positions with any other firm in the industry for the next 1-3 years.

Additional terms of the settlement include Coinsquare and its subsidiary implementing ‘substantial corporate government improvements’. Improvements include hiring a CEO and CTO, creating an internal whistleblower program and establishing an independent board of directors.

Jeff Kehoe, Director of Enforcement at that OSC, released the following statement, ‘Being an innovator in our capital markets is not a free pass to disregard Ontario securities law. All market participants – including those in novel industries – must act honestly and responsibly.’

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