Heh. I have tried to buy BTC for the past two days, but nobody was interested in selling at the last lowest ask price. On the Canadian exchange, it seems as if some people are controlling the market by buying and selling to themselves.

I understand that the ask prices are going up in part because of increased demand, but the constant ratcheting up of asks smells fishy.

Buying and selling to yourself on Cavirtex would be a strange decision. You'd lose 3% on each trade you make.

True but if you were able to nudge up the price by more than that it might be worth it.

If these things are true, why isn't someone making a killing in arbitrage?

Probably because quite a lot of people who buy and sell bitcoins do not understand financial markets and their regulations.