Coinsquare CEO allegedly ordered its employees to make fake trades

kryptqnick

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Quote from: Kemarit on June 14, 2020, 08:44:43 PM

According to this, (https://www.vice.com/en_us/article/5dz35q/cryptocurrency-exchange-wash-trading-coinsquare)

Coinsquare CEO himself, Cole Diamond ordered his employees to make fake trades to give the impression that their trading exchanges has indeed lots of liquidity and performing and doing good. There is supposedly a leaked emails, Slack messages.

Quote

According to the material, Coinsquare was "wash trading," which means it was automatically buying and selling currency between accounts it controlled. The news provides evidence of a practice that is often suspected in the cryptocurrency world but rarely proven, and can draw attention from regulators.

"Turn it back on," one seemingly angry March 2019 Slack message from Coinsquare CEO Cole Diamond to other employees of the company read, referring to the code that managed internal trades after an employee switched it off, fearing retaliation from regulators.

We all know that this has been practice by low-tier exchanges, but we don't have proof yet. Tried to search this supposedly emails and messages to really see first hand, but so far can't find any.

And if this is true then its pretty damning evidence against Coinsquare and we will see how OSC (Ontario Securities Commission) will do, what are the punishments etc.

Trading volumes are never to be trusted. This is not the first time manipulations to increase them are in place, although I believe previous scandals were about significantly simpler 'solutions' such as just reporting the volume that is higher than the real one. Coinsquare here made a more sophisticated move with artificially but truly increasing the volume. All in all, perhaps we should stop evaluating exchanges by volumes and focus on other things like reputation, policies and the number of active users (the latter can also be manipulated, but I think it's less likely to make a big impact).

dunfida

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Is this thing still surprising?

Wash trading or fake volumes had been known in the past not only these things do exist on crypto world but also in other traditional markets as well.
Exchanges would really have that kind of act which doesnt only limit out on small exchange but also to bigger ones to retain up their
reputation in talks of liquidity or volume but everything can really be faked out.

MCobian

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Not only Coinsquare exchange does fake trades, many other exchanges do the same thing. Therefore there is no guarantee of choosing
exchanges based on trading volumes. What Cole Diamond has done really pisses me off, people like him can harm many people. Do more
in-depth research to be able to find exchanges with real volume, so that we can avoid using exchanges that are have fake volumes.

thesmallgod

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Fake trade has long been identified by individual before this time and this is exactly reason why people complain a lot about the exchange ranking which was previously provided by the coinmarketcap before it was later adjusted when bought by the Binance. Coinsquare is a centralized exchange platform which to me is not that popular globally even though it has been in existence for almost six years. However, the punishment for faking volume will depend on the real evidence and also if there is any sanction provided in canada for any businesses that involve in something like this

omone1

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This is bad and this is what they do to attract customers to their platforms and will never get a good experience. For this I hate Hotbit that keeps listing any trending coin to attract traders, they will disable withdrawals and their withdrawal fees are very high.

Hydrogen

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Good write up from vice. Here are some of the most relevent sound bytes.

Quote

Wash trading is illegal with stocks and futures, including the U.S., because it can be used to manipulate prices. Cryptocurrency has a particular problem with the practice; one study found that nearly 95 percent of all Bitcoin trading is artificially created by unregulated exchanges.

Several of the leaked documents specifically show Coinsquare CEO Cole Diamond pushing for the company to practice wash trading, and employees of the company being uncomfortable with the practice. The documents allege that Coinsquare performed wash trading at least during 2018 and 2019.

One employee who was able to disable the code decided to do so, seemingly in anticipation of an upcoming visit from regulators, according to the leaked material. In a Slack message, Diamond asked who disabled the code that managed internal trades.

"But whoever did that took ZERO steps to ensure that a MASSIVE change to how we are viewed externally would be enormous," Diamond replied. "Turn back on please."

External parties had already spotted something wrong with Coinsquare months earlier. In August 2018 cryptocurrency enthusiasts on Reddit noticed that much of Coinsquare's trading happened outside of normal trading hours. Others suspected Coinsquare was faking how much the company was really trading.

It is interesting how the world of low commission crypto trading has influenced the way stock markets do things. Brokers used to charge higher than $5 commissions for the buying/selling of stocks. Today they follow the crypto model for low or no commissions on trades. I would not be surprised to learn stock markets are on some level forging/faking trading volume identical to how crypto exchanges are being accused of here.

Payment processors like paypal are able to get away with so much shady behavior. I would guess that precedent will become normalized across the financial industry for those who have established ties with the right people.

gentlemand

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Quote from: pooya87 on June 14, 2020, 10:03:11 PM

the story makes no sense to me. why would he need to tell anyone including his employees to make fake trade in his platform when he can do what all the other exchanges have been doing which is create a bot that creates as many trades as he wants to increase the shown volume? or simply do what shittier exchanges like Yobit do and bump the volume manually Cheesy

Okex employees alleged the same when it was Okcoin. They were told to go trade. I'm not sure why either. Perhaps it looks a bit more convincing with the human factor involved. I remember times in the Chinese casino days when their volume bots broke and it went to instant deadness. That's not a great look.

FAHRKERIM

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Lmao, this looks exactly how presidential elections are going on in my country: all gov and budget workers are forced to go and vote for a current president or else they get fired

slaman29

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Big surprise right? I have worked for bosses who forced us to comment on his Facebook page in the past. When some of us didn't do it, they got issued a HR warning, and then later on we even got a weekly email with reminders and suggestions to post comments.

So I dunno, if CEOs do that, no surprise.

jostorres

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Most of these smaller exchanges are always desperate, they want to be at the top so they are ready to do anything it takes for them to be seen as a good exchange. Many of them has been accused of doing such things. This is what happens when you open up a business when you don’t even have the money to run it. It’s really bad that they are doing this sort of thing. Instead of this, what they should have done is to build a good website that has a better user interface than other exchanges. Then they can start offering better services to attract investors and traders, and then try to promote their company through adverts. That would have been better than just doing some dumb stuffs to deceive people which at last they still get caught.

bbc.reporter

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Quote from: arwin100 on June 16, 2020, 05:14:02 PM

Quote from: bbc.reporter on June 15, 2020, 08:49:21 PM

Quote from: mk4 on June 14, 2020, 09:05:46 PM

I'm really not surprised that some exchanges do this in my opinion(along with wash trading). If you sort the exchanges on Coinmarketcap through 24hr volumes, there are a good number of unknown exchanges near the top.

https://coinmarketcap.com/rankings/exchanges/

Agreed! Stricter regulations on the cryptospace are coming in Canada hehehe.

However, would everyone be surprised if some of the exchanges might be a part of a global money laundering ring? It appears anything is possible in the cryptospace.

This should be implemented around the globe but seems this regulation is hard to get up since there are so many unlicensed exchange popping up these days.

Also, the future of cryptocoin trading might be on gray markets. Small exchanges that do not ask KYC documents from users.

I reckon that darknet exchanges in Tor might be the next course in a world of stricter than strict regulations on the cryptospace.

@pooya87. However, that might be what some exchanges are, fiat launderers. Also, it will not be surprising for me after following BTCe and Alexander Vinnik closely.

pooya87

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Quote from: bbc.reporter on June 15, 2020, 08:49:21 PM

However, would everyone be surprised if some of the exchanges might be a part of a global money laundering ring? It appears anything is possible in the cryptospace.

it would be very surprising to me since seeing some money laundered using a bitcoin exchange is one thing (and is inevitable) but to be part of a big money laundering operation is another. and money launderers are using fiat which is a lot less traceable than bitcoin not to mention a lot easier to launder. they would also not lose any money due to volatility!

maxreish

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There is a saying; If there's a smoke, there's a fire.
If these rumours are true, the CEO should explain and answered all the alleged accusations. Such exchange name were dragged down reputation if this is true.

On the other hand, I have found out there has been an old issue about Coinsquare exchange doing such faking volumes before.
- Fake Volume Coinsquare feedback

TravelMug

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Quote from: bbc.reporter on June 15, 2020, 08:49:21 PM

Quote from: mk4 on June 14, 2020, 09:05:46 PM

I'm really not surprised that some exchanges do this in my opinion(along with wash trading). If you sort the exchanges on Coinmarketcap through 24hr volumes, there are a good number of unknown exchanges near the top.

https://coinmarketcap.com/rankings/exchanges/

Agreed! Stricter regulations on the cryptospace are coming in Canada hehehe.

However, would everyone be surprised if some of the exchanges might be a part of a global money laundering ring? It appears anything is possible in the cryptospace.

It could be, so I wouldn't be surprised if we see hear exchanges being taken down like BTC-e. Yes, everything is possible, hiding the guise of cryptospace but behind those bad actors are really laundering money, this is not far fetched.

I'm sure it wake up Canadian regulatory again after the QuadrigaX exit scam, and will put Coinsquare at the radar for now and gather more information. And maybe we will see Canada SEC pursuing them in the future.

CaVO32

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Quote from: coupable on June 16, 2020, 03:12:24 PM

Sadly, we can't fight this kind of shady activities. Almost the majority of exchanges [old and new] make fake trades or declare fake trading volumes. However, the story in the mentioned article doesn't look appropriate because there is no reason for an exchange CEO to announce this kind of order decision in an email and that the email can be licked. It would be safer and less cost when using bots.
That article doesn't provide any solid proof, although it's almost possible to be happened as the exchange isn't well known.

You mean licked here as - leaked. Wink

It is not really a smart move from CEO to send such kind of email because it can be used against him or the exchange. So more than likely, it is a fake email. But going back to wash trading, it is really happening even without this email from CEO. A lot of exchanges are doing this shady strategy to make their exchange look good in the community. Just look at P2PB2B, up until now they can't recover their reputation. They can't even run their own sig campaign in the forum.

Also, there are specific coins or projects that do this kind of tactic even without the exchange's knowledge. This is because a lot of developers are doing this to attract potential buyers of their coin. And they will leave the trading when they accumulated enough money for their pockets. So everyone should really be alert on this kind of trading.

arwin100

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Quote from: bbc.reporter on June 15, 2020, 08:49:21 PM

Quote from: mk4 on June 14, 2020, 09:05:46 PM

I'm really not surprised that some exchanges do this in my opinion(along with wash trading). If you sort the exchanges on Coinmarketcap through 24hr volumes, there are a good number of unknown exchanges near the top.

https://coinmarketcap.com/rankings/exchanges/

Agreed! Stricter regulations on the cryptospace are coming in Canada hehehe.

However, would everyone be surprised if some of the exchanges might be a part of a global money laundering ring? It appears anything is possible in the cryptospace.

This should be implemented around the globe but seems this regulation is hard to get up since there are so many unlicensed exchange popping up these days.

I think those laundering scenarios are happening since in casino it happens in the past so provably this one are already used by those frauds to avoid being track on their transactions.

pixie85

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Even isf this nes is real the exchange did not impact the price. It had about a volume of about 8 million dollars so that's on the bottoim of ranked exchanges.

Quote from: mk4 on June 14, 2020, 09:05:46 PM

I'm really not surprised that some exchanges do this in my opinion(along with wash trading). If you sort the exchanges on Coinmarketcap through 24hr volumes, there are a good number of unknown exchanges near the top.

https://coinmarketcap.com/rankings/exchanges/

Chinese exchanges were faking volume since the beginning. They stopped for a while when their government got involved but they they were all banned and had to move to Hong Kong, Singapore and other countries. I'm sure they are still wash trading there.

coupable

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Sadly, we can't fight this kind of shady activities. Almost the majority of exchanges [old and new] make fake trades or declare fake trading volumes. However, the story in the mentioned article doesn't look appropriate because there is no reason for an exchange CEO to announce this kind of order decision in an email and that the email can be licked. It would be safer and less cost when using bots.
That article doesn't provide any solid proof, although it's almost possible to be happened as the exchange isn't well known.

arayde

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It will be safer to him to order 3rd party market making

hv_

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Clean Code and Scale

Quote from: bbc.reporter on June 15, 2020, 08:49:21 PM

Quote from: mk4 on June 14, 2020, 09:05:46 PM

I'm really not surprised that some exchanges do this in my opinion(along with wash trading). If you sort the exchanges on Coinmarketcap through 24hr volumes, there are a good number of unknown exchanges near the top.

https://coinmarketcap.com/rankings/exchanges/

Agreed! Stricter regulations on the cryptospace are coming in Canada hehehe.

However, would everyone be surprised if some of the exchanges might be a part of a global money laundering ring? It appears anything is possible in the cryptospace.

Scary if true. Bitcoin is quite transparent and should be cause of a few

davis196

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What the hell is Coinsquare and why should we care about it?I've never heard anything about Coinsquare.
I guess it's one of the small cryptocurrency exchange platforms,that are going the same old shit many other trading platforms are going-faking trading volume to make them look bigger than they actually are.
I'm glad that they got caught and now it's time for punishment. Grin

This news makes me think that the cryptocurrency industry really needs more strict government regulations,all though I hate regulations,but I'm sick and tired of the trading platforms faking trading volume.

bbc.reporter

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Quote from: mk4 on June 14, 2020, 09:05:46 PM

I'm really not surprised that some exchanges do this in my opinion(along with wash trading). If you sort the exchanges on Coinmarketcap through 24hr volumes, there are a good number of unknown exchanges near the top.

https://coinmarketcap.com/rankings/exchanges/

Agreed! Stricter regulations on the cryptospace are coming in Canada hehehe.

However, would everyone be surprised if some of the exchanges might be a part of a global money laundering ring? It appears anything is possible in the cryptospace.

pooya87

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the story makes no sense to me. why would he need to tell anyone including his employees to make fake trade in his platform when he can do what all the other exchanges have been doing which is create a bot that creates as many trades as he wants to increase the shown volume? or simply do what shittier exchanges like Yobit do and bump the volume manually Cheesy

if there are such Emails then the owner is either a super noob or it may simply be asking them to use the exchange to get feedback or find bugs or something like that.

btc_angela

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But we need to see the smoking gun here, yes we've heard this wash and fake volumes from exchanges in the past, even Chinese top exchanges have been accused in the past if you guys remember. But we need to see the evidences and see how it sits with the definition of wash trading, if there's such thing in cryptos (clear definition).

mk4

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I'm really not surprised that some exchanges do this in my opinion(along with wash trading). If you sort the exchanges on Coinmarketcap through 24hr volumes, there are a good number of unknown exchanges near the top.

https://coinmarketcap.com/rankings/exchanges/

Kemarit

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According to this, (https://www.vice.com/en_us/article/5dz35q/cryptocurrency-exchange-wash-trading-coinsquare)

Coinsquare CEO himself, Cole Diamond ordered his employees to make fake trades to give the impression that their trading exchanges has indeed lots of liquidity and performing and doing good. There is supposedly a leaked emails, Slack messages.

Quote

According to the material, Coinsquare was "wash trading," which means it was automatically buying and selling currency between accounts it controlled. The news provides evidence of a practice that is often suspected in the cryptocurrency world but rarely proven, and can draw attention from regulators.

"Turn it back on," one seemingly angry March 2019 Slack message from Coinsquare CEO Cole Diamond to other employees of the company read, referring to the code that managed internal trades after an employee switched it off, fearing retaliation from regulators.

We all know that this has been practice by low-tier exchanges, but we don't have proof yet. Tried to search this supposedly emails and messages to really see first hand, but so far can't find any.

And if this is true then its pretty damning evidence against Coinsquare and we will see how OSC (Ontario Securities Commission) will do, what are the punishments etc.

Topic: Coinsquare CEO allegedly ordered its employees to make fake trades (Read 699 times)