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