Everyone knows it's wash trading and gives a bad image of the exchange.
2°. We lose transparency regarding the FSA and. especially value as this user isn't paying fees.
3°. The user removes liquidity before the arbitrage users can take it so it removes liquidity for close to 0% instead of the 0.15%+ that pay an arbitrager.
4°. The user doesn't buy COS on the market to trade, so it's essentially dumping COS into the FSA (exactly what happened to CFT) making COS dump over time.
5°. The user loses money agains other users, so the people running it (potentially the team) is losing a lot through that user, rather than using the money to what matters like liquidity or users.