OCT trading involves high value deals that can run into the hundreds of millions of dollars. Whales want privacy and zero slippage, which isn’t possible on a cryptocurrency exchange, while buyers want large quantities of bitcoins at below market rates. It’s an arrangement that suits both parties, but for it to work, trust is essential as the cautionary tale of a $600 million OTC scam shows.
Also read: India Bitcoin Caper: 10 Cops Busted Over Kidnapping and Extortion
The 99,848 Bitcoin Deal That Almost Went Through
On April 2, Miles, an OTC bitcoin broker, left Europe for Singapore. During the 12-hour flight, he had plenty of time to reflect on the 99,848 BTC sale he would be closing, in return for which he would pocket a 1,000 BTC commission. News.Bitcoin.com has spoken to multiple sources involved with the deal on the condition of anonymity, and has viewed the letter of intent (LOI) and other supporting documentation. Prior to Miles (not his real name) flying to Singapore, several weeks of due diligence and negotiations on behalf of buyer and seller had been conducted, as is customary.
The buyer had $700 million they were looking to invest in bitcoin, while the seller possessed 99,848 BTC valued at around $617 million. The LOI specified that these would be sold at market rate minus 12% discount. Upon arrival in Singapore, Miles would be met by Daniel (not his real name), a local broker who had set up the deal. By the time the two brokers met face-to-face, however, they had developed concerns about the shadowy Asian seller. Miles explains:
I had brought several buyers to this seller. The seller requested to be fully anonymous and we were told he would only appear during the actual transaction
