User Report: How I got robbed with an OTC (Over The Counter) Trade

Halt OTC robbery. Recently, we saw someone in a chat room telling a sad story. The guy got robbed in an Over-the-counter deal in a Telegram group for such kinds of transactions. Obviously, he is still angry about what happened and searched for a way to spread a warning to the community, trying to effectively reduce the number of scams and learn from his expensive lesson to do something positive for others out of his pitiful situation. We want to help him and ensure our readers won’t fall for the same scam. Thank you, Samo, for compiling your story into an interesting read. And now read and scare while reading this cryptocurrency thriller. The following content has been contributed by Telegram user @samurai007 – Please get in touch with him if you have further ideas, hints, or information for his hunt.

Why I Ventured Into OTC Trading

On average, about 9 million is stolen in the cryptocurrency market every day. Who knows what the number would be if all small thefts, scams, and hacks that nobody knows about were considered? If you get robbed on the street, you call the police, but what can you do if you get robbed in cyberspace? Well, this article is one of the things I will do about it.

HALT OTC ROBBERY!

I made a mistake, did things too quickly, and lost quite some money, which was stolen by a scammer on a Telegram chatroom group called OTC Trade NEP5, ERC20, ICO. There were a lot of interesting offers with slightly better prices than in another well-known group. This should have been the first warning. Those compelling prices, which were set a little below the OTC market prices, were set with the purpose of attracting as many traders as possible. Another thing that acted as a positive impression was the large number of members, which gave me some sense of security. Those numbers were fake, in my opinion. The group had more than 5k members. I am not so sure if the trade offers were real at all. The group had just one administrator, Dmitri W, with the username Dmitri1986. This should have been another warning for me. I should have stepped away, but I didn’t. Albert Einstein said that anyone who has never made a mistake has never tried anything new.

OTC Crypto Trading Explained

So why even try such trading if you have trusted regular exchanges where you can make trade not worrying that you might lose your money while doing the trade?
I have heard about OTC trading and started to read about this hidden market to learn some basics. Soon I have found out that the OTC market is way bigger than the regular cryptocurrency market and probably all major transactions happen there.

I believe most people didn’t hear about the OTC trading or know just a little about it, which is why I will make a quick abstract from the articles I have read. It is also important for me to inform you about this way of trading, despite my main goal being to warn people about the scams and scammers that come with it.

OTC (over-the-counter) trading is basically a trade that is done by one buyer and one seller behind the scenes, bypassing the exchanges. That kind of trading has been practiced for a long time in various markets. It is preferred by wealthy investors or hedge funds that make large transactions.
Recently, OTC has been done by brokers and some platforms developed by cryptocurrency exchanges. It is also done through chat rooms.

Explaining why someone would choose OTC trading over regular exchanges is necessary.

Better Prices

PRICE …you can get a better price by negotiating with the seller.

Liquidity for Large Orders

LIQUIDITY… There is a lack of liquidity on some exchanges, trading pairs, and tokens/coins. That is especially problematic when you want to fill a large order.

Reduced Slippage

SLIPPAGE … Slippage refers to the difference between the expected price of a trade and the price at which the trade is executed. Slippage often occurs during periods of higher volatility when market orders are used and when large orders are executed, when there may not be enough interest at the desired price level to maintain the expected price of the trade.

Exchange Limits & KYC Hurdles

LIMITATIONS …cryptocurrency exchanges often set trading limits, such as KYC (Knowing Your Customer), day trading, and withdrawing amounts. Completing larger trades and exchange KYC verification processes is time-consuming.

Those are the obvious problems regarding regular exchange trading in the cryptocurrency market. Selling hundreds of millions of dollars of bitcoin on a public exchange in a short period of time could crash the market due to a lack of liquidity. So, with OTC trading, you can make large transactions without disturbing the market prices and without becoming bait for crooks. You can discuss and set the price and complete a trade instantly.
One research company has concluded that the OTC market of bitcoin is at least two to three times larger than the exchange market, so 1 to 1.5 million BTC is traded on the OTC market daily. Not all transactions show up on public blockchains, as many venues have omnibus accounts, so only net changes to their positions will be written to the public blockchain.

Unpredictable and Extreme Rates

That is why the movement of the cryptocurrency exchange market is unpredictable and often demonstrates an extreme rate of volatility. If the bitcoin exchange market only accounts for 25 percent of the actual volume of the dominant cryptocurrency, it is that much more difficult to find the cause of the movements of BTC and other cryptocurrencies, which also follow the movement of bitcoin.
OTC trading has a significant role in the cryptocurrency market, and many traders are aware of that fact. More and more traders use the OTC every day, and there are also those who are restricted or limited from trading due to national regulations on cryptocurrency trading. Not just the big players, but also regular traders, who see the OTC trading as a good opportunity to purchase a coin/token for a slightly better-fixed price, try it. This means smaller sums are involved in separate trades, less experienced traders, and limited regulations. So this becomes an El Dorado found again for all the scammers, thieves, and opportunists.

How Chat-Room OTC Deals Work

There are many paths you can take to make an OTC trade, but there are also many wrong turnings. You can do the OTC trade on the ATM machine, you can find a broker (which can be quite expensive), cryptocurrency exchange OTC platforms or chat rooms. Many regular traders use chat rooms to discuss different projects, prices, trading techniques, and other stuff regarding the cryptocurrency market and trading. Telegram and Discord are two of the most popular chat rooms in the crypto scene. They are used by traders and different projects who can join or create specific groups. Such groups are also created and used for OTC trading. Chatrooms’ OTC groups have almost no regulations and legal criteria. They are managed by administrators who usually offer escrow services in exchange for a fee. The reputation of the OTC group and administrators is probably the best indicator if one should choose to make a trade and trust the escrow provided. Some groups also offer allowlisting and KYC from both parties and escrow to make sure that you know with whom you will make a deal.

Chatroom Explained

Trading via chatroom has a history and is used even more today. The first major Bitcoin OTC trade was done on an IRC chatroom channel #bitcoin-otc. The trade itself is quite simple. Basically, you can post your offer that includes information on the trade you wish to complete, where you specify the type of trade, the coin/token pair, and the amount you want to trade, and finally, your price proposal. You must then wait for the counterpart contact. You can also just respond to an existing offer. Both sides negotiate the conditions and specifics and make a deal by themselves or with an agreed-upon escrow.
This way of trading can be used for all cryptocurrencies or some tokens that are not officially available on the market. People even sell the ICO (Initial Coin Offering) allocations that are hard to get.

You can get stuff on the OTC that you can’t anywhere else. This aspect has another appeal for regular traders as they can buy some potentially worthy coins/tokens for a good price before they hit the market. Another opportunity for scammers to seize and another warning for traders to stay away, as those kinds of trades are often accompanied by greed and lust for money. Chasing good prices and quick profits is where people lose their minds and forget about safety. One must always remember that in the cryptocurrency market, it is always better to err on the side of caution.

The Telegram Scam: Step-by-Step Breakdown

I wanted to buy a token but couldn’t secure an allocation during the ICO due to the difficult entry conditions set by the project’s team. I ended up missing out on the allocation after a long process of trying to get whitelisted for the crowdsale. The fear of missing out (FOMO) lingered with me, so I decided to explore over-the-counter (OTC) trading. I found a Telegram group that had a good reputation and many members, including administrators who were whitelisted. After completing my own allowlisting, I posted an offer. Initially, I set a very low price to see how others would react.

Setting Up the Deal

When I received no responses to my initial offer, I decided to raise it. Curious about the OTC market prices for the token I was interested in, I began searching for another OTC group. I came across a group called “OTC Trade NEP5, ERC20, ICO,” where one of the administrators was Dmittri W, who went by the username @Dmittri1986. I checked their prices, which were slightly better than those in the previous group, so I decided to post my offer there as well. At the time, I didn’t pay much attention to this group’s reputation and security because I was only using it for comparison.

Late that night, I received two offers in quick succession—likely just a coincidence. After discussing both offers, I chose to go with the more appealing one. In my fatigue and excitement about what seemed like a good deal, I completely forgot about the second post I had made in the other group, which I knew little about. This oversight turned out to be a significant mistake.

The OTC Escrow Trap

I made a deal with a seller named 0. We contacted an escrow service and an administrator, “Dmittri W.” We agreed that I would send my money to the escrow, and once he confirmed the transaction, the seller would do the same and send me the money.

A strange coincidence was that there were issues with the blockchain involved in this trade, which caused my transaction to not go through, as if someone was trying to prevent me from making a mistake. Despite this, I ignored my instincts and decided to force the transaction, but it ended up getting stuck anyway. So, we agreed to wait and finish the deal in the morning.

Before I went to bed, I checked one last time, and the transaction had gone through. However, no one responded, probably because they were already asleep. I went to bed feeling very uneasy, hoping everything would turn out all right. At that moment, my intuition was already trying to tell me that I had made a mistake. Unfortunately, when morning came, no one responded.

Funds Sent—And Gone

Soon, I heard three message alarms, one after another. Even before I looked at my phone, I already knew what had happened. The buyer and the seller left the conversation, and the chat room was gone. So was my money. And there was nothing I could do about it, as I realized I had made a deal with some guys from this OTC group I knew nothing about. Another thing I realized was that I was tricked and robbed by one person, as only one person could delete those conversations in a second. The worst part was that I could check the scammer’s wallet, and I could see my money, but I could not touch it. This was a torment for my foolish deed.

Known Scammer Wallet Addresses

I want to post the NEO wallet addresses of a seller and an escrow. That might help you not to get robbed by this scammer(s). 

Escro: Dmittri W … @Dmittri1986 NEO address … AHBWHizMAi43vfDGeZDbdcqDoCFUmY3YjM

Seller: NEO address … AMCXsBcQHn7vQ8GoS8fHAbALFBkEJfYBAp

I have found one other article dealing with the same name and address, but I don’t have the permission to include that information yet. I followed the transactions from these addresses, and the money goes through one particular big exchange, and there are very large assets on that wallet. I also believe that this scammer steals the identities of other people and uses them to betray people. Please be aware that those people mentioned in this article, if they are real, are probably not involved and don’t even know about this scam.

Red Flags I Missed

All that I wrote above influenced my decision to make a trade-in, but I got scammed. There was this wish to go into the unknown field of the cryptocurrency market, to learn to trade via OTC, but mainly, there were those bad factors that drove my decision. Opportunism, lust, and greed. Now that I know.

Key Takeaways & Safety Tips

I was tired and careless and acted stupidly. I am writing this in detail because I believe that such scenarios are very common. Maybe not all the factors involved or the same type of trade, but some segments for sure. You should always check things as many times as necessary so that you are sure what you are doing. Don’t get greedy and don’t chase opportunities that are long gone.

Final Thoughts on the OTC Scam

I have been involved in the crypto market for over a year. I don’t handle large assets. I consider blockchain technology a key factor in shaping the future, and I view trading as a valuable experience that offers more than just financial gain. I regret the funds that were stolen from me, which I likely won’t recover. This is a mistake I won’t forget, as it serves as a chance for me to make a positive change for myself and others.

Please be careful and enjoy yourself while trading, or use one of the best crypto signal groups to help you with trading!

p.s.
You can contact me via Telegram…my username is @samurai007

References

1. https://www.finder.com/otc-cryptocurrency-trading
2. https://www.investopedia.com
3. https://www.coindesk.com/bitcoin-brokers-trade-millions-without-exchange/
4. https://news.bitcoin.com/9-million-day-lost-cryptocurrency-scams/
5. https://hackernoon.com/the-6-costliest-mistakes-people-make-when-trading-bitcoin-otc-d975d4acda25