It would seem to me that their entire steem market on their end could be paper, until such time as someone wants to actually transfer it somewhere.
And at that time, their wallet is broken.

That is an enormous red flag that calls their solvency into question. Hopefully they are just manipulating the market (and probably speculating with customer funds in the process), but I believe to those of us who traded on Mt.Gox once upon a time (I can only really speak for myself, but I imagine this is the case) find their shenanigans quite worrying.