Canadian regulator settles charges with Coinsquare as the exchange admitted to wash trading

The Ontario Securities Commission (OSC) has settled charges with Coinsquare and its executives after they admitted to having engaged in wash trading.

As part of the settlement, Coinsquare CEO Cole Diamond and president Virgile Rostand agreed to resign from their positions and paid penalties of $1 million and $900,000, respectively, the OSC announced on Tuesday.

Diamond and Rostand have also been banned from acting as registrants and directors for three years, meaning they cannot influence the management of Coinsquare for the said period. Coinsquare's chief compliance officer Felix Mazer has also resigned from the position and voluntarily paid $50,000 to the OSC. Mazer has also been banned from acting as a director or officer of a registrant for one year.

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Additionally, Coinsquare, Diamond, and Rostand will pay a total of $300,000 toward the costs of OSC's investigation efforts, per the announcement. 

The regulator said Coinsquare admitted that it engaged in market manipulation by reporting inflated trading volumes between 2018 and 2019. Coinsquare reported around 840,000 wash trades amounting to an estimated 590,000 bitcoins (currently worth about $5.5 billion). These trades had "no economic substance," said the regulator.

Coinsquare's wash trading practice came to light last month when Vice's publication Motherboard wrote a story on the matter after obtaining leaked emails, Slack messages, and other files. Earlier this month, the OSC charged Coinsquare and subsequently settled charges in a hearing on Tuesday.

Founded in 2014, Coinsquare has raised CA$ 53 million (~US$ 40 million) in fun