Coinsquare CEO allegedly forced employees to fake exchange volume

Accusations of wash trading have been levied at Canadian crypto exchange, Coinsquare, after leaked messages allegedly show its CEO distorting exchange volume.

2 min read

Jun 13, 2020

Cole Diamond, CEO of Canadian crypto exchange Coinsquare, stands accused of wash trading after leaked messages allegedly show him commanding employees to falsify exchange volume.

Decrypt has reached out to Coinsquare about the allegations and will update this story with responses.

Wash trading is the practice of executing large internal trades to artificially bolster an exchange’s volume. This creates the illusion of liquidity and popularity, enticing new customers.

A damning report last March by Bitwise Asset Management found that as much as 95% of bitcoin trading is falsified. The global report volume volume on FTX shows that 80% of crypto exchange volume is fake.

According to a June 13 report from Vice, this is a practice Coinsquare knows all too well.

"Turn it back on," reads a leaked message obtained by Vice. The order, apparently issued in March 2019 (the month the Bitwise report broke) by Cole to a Coinsquare employee, allegedly refers to the exchange's internal wash trading system.

The system was allegedly turned off in preparation for a visit from the Ontario Securities Commission. The act of wash trading, however, violates Ontario's securities law.

Compliance apparently wasn't at the top of Cole's concerns when he learned that an employee switched off the system. "Whoever did that took ZERO steps to ensure that a MASSIVE change to how we are viewed externally would be enormous," read the leaked Slack message from Cole, reported Vice.

The wash trading system was apparently turned back on by the employee. “[He] said he didn't approve, but that he did it because Cole asked him to," reads a leaked email between Coinsquare employees, reported Vice. “The decision to continue wash trading was final by Cole.”

A sudden drop in exchange volume would have indeed looked suspicious. This is especially true given the community's doubts around Coinsquare's liquidity.

In 2018, Redditors started to question the validity of Coinsquare's volume. According to a Thread, aptly titled "Coinsquare faking volume," one user claimed that the team had admitted to the practice.

Get crypto news straight to your inbox--

sign up for the Decrypt Daily below. (It’s free).

Get Email!

Jito Price Jumps After Topping Solana DeFi Protocols With $1 Billion Locked

The Jito Network rose to the top of the list of decentralized finance (DeFi) protocols on the Solana network on Thursday, growing to $1.04 billion in total volume locked (TVL), according to DappRadar. “Jito was among the handful of teams that continued to build on Solana when the network’s TVL dropped as low as $215 million,” Jito Network contributor Lucas Bruder told Decrypt. “Contributors were in the trenches with the community and are proud to be part of the wider Solana resurgence.” After ne...

Bulletproof Cadillac, Butler, and $1.5M Titanic Watch: FTX Exec's Lavish Spending Continues

As Sam Bankman-Fried stares down the barrel of a 25 year prison sentence, most of his former FTX colleagues have done their best to stay out of the limelight. But one former executive of the collapsed crypto exchange is now raising eyebrows for his extravagant purchases. Patrick Gruhn, the former head of FTX Europe, recently spent $1.5 million to acquire a gold watch found on the corpse of a victim of the Titanic, according to a report in The Wall Street Journal. The watch originally belonged t...

Coinbase $1.6 Billion Quarterly Profits Boosted By Stablecoins, Rising Crypto Prices

America’s leading crypto exchange said Thursday that sales jumped to $1.6 billion in the first quarter of this year as transaction revenue doubled over the prior three months. Coinbase’s first-quarter revenue is up big compared to $772 million over the same period year ago, the $1.6 billion bottom line exceeding analyst expectations of $1.3 billion. The San Francisco-based company also reported earnings of $4.40 per share, coming in well above Wall Street expectations of $0.90. Coinbase’s trans...

News

Courses

Deep Dives

Coins

Videos