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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 on a Telegram group for such 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 by doing something positive for others from 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 be scared 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. Recovering assets in cryptocurrency theft can be a complex and challenging process. It often requires specialized knowledge of blockchain technology and access to various investigative tools. Additionally, victims may face difficulties in navigating the legal landscape to regain their funds.
HALT OTC ROBBERY!
I made a mistake, did things too quickly, and lost quite a bit of money to a scammer in a Telegram chat group called OTC Trade NEP5, ERC20, ICO. There were many interesting offers at slightly better prices than in another well-known group. This should have been the first warning. Those compelling prices, set slightly below OTC market prices, were intended to attract as many traders as possible.
Another thing that left a positive impression was the large number of members, which gave me a 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 a trade without worrying you might lose your money?
I have heard about OTC trading and have started reading about this hidden market to learn the basics. Soon I 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 haven't heard of OTC trading or know only a little about it, which is why I will provide a quick summary based on the articles I have read. It is also important for me to inform you about this way of trading, even though my main goal is to warn people about the scams and scammers that come with it.
OTC (over-the-counter) trading is a trade conducted between one buyer and one seller behind the scenes, bypassing 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 refers to the difference between the expected price of a trade and the price at which the trade is executed. Often, slippage occurs during periods of higher volatility, when market orders are used, large orders are executed, and 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 (Know Your Customer) requirements, day trading limits, and withdrawal limits. 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' worth of bitcoin on a public exchange in a short period could crash the market due to insufficient liquidity. So, with OTC trading, you can execute large transactions without disrupting market prices or attracting crooks. You can discuss, 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 are recorded there.
Unpredictable and Extreme Rates
That is why the cryptocurrency exchange market's movements are unpredictable and often highly volatile. If the bitcoin exchange market accounts for only 25 percent of the actual volume of the dominant cryptocurrency, it is that much more difficult to identify the causes of BTC and other cryptocurrencies' movements, which also follow bitcoin's.OTC trading plays a significant role in the cryptocurrency market, and many traders are aware of this. More and more traders use the OTC every day, and some are restricted from trading due to national regulations on cryptocurrency trading. Not just the big players, but also regular traders who see 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 at an ATM, with a broker (which can be quite expensive), on cryptocurrency exchange OTC platforms, or in chat rooms.
Many regular traders use chat rooms to discuss projects, prices, trading techniques, and other topics related to the cryptocurrency market. 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. Chatroom OTC groups have almost no regulations or legal criteria. They are managed by administrators who typically offer escrow services for a fee.
The reputation of the OTC group and administrators is probably the best indicator of whether one should choose to make a trade and trust the escrow provided. Some groups also offer allowlisting, KYC for both parties, and escrow to ensure 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 conducted in the IRC 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, specifying the type of trade, the coin/token pair, the amount you want to trade, and your price proposal. You must then wait for the counterpart to contact you. 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 trading approach can be used for all cryptocurrencies or for 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 project team's difficult entry conditions. 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, so I decided to explore over-the-counter (OTC) trading. I found a Telegram group with a good reputation and many members, including whitelisted administrators. 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 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 used in this trade, which caused my transaction not to 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 see my money, but I could not access it. This was a torment for my foolish deed.
Known Scammer Wallet Addresses
I want to post the NEO wallet addresses for a seller and an escrow account. 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 another article with the same name and address, but I don't have permission to include that information yet. Following the transactions from these addresses, the money goes through one particular large exchange, with very large assets in that wallet. I also believe this scammer steals others' identities and uses them to betray them. 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 trade in, but I got scammed. There was a desire to enter 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 to be sure what you are doing. Don't get greedy and don't chase opportunities that are long gone.
Final Thoughts on the OTC Scam
Having been involved in the crypto market for over a year, I have not managed large amounts of capital. Blockchain technology is a key driver of the future, and trading is seen as a valuable experience that offers more than just financial gain. The funds stolen from me are regrettable and likely unrecoverable. This mistake serves as a reminder, providing an opportunity to make a positive change for oneself and others. Please be careful and enjoy yourself while trading, or join one of the best crypto signal groups to help you trade!
p.s.
You can contact me via Telegram…my username is @samurai007
References
1. https://www.investopedia.com
2.https://news.bitcoin.com/9-million-day-lost-cryptocurrency-scams/
3. https://hackernoon.com/the-6-costliest-mistakes-people-make-when-trading-bitcoin-otc-d975d4acda25 When considering how to spot cryptocurrency fraud, it's crucial to remain vigilant and informed. Many scams rely on high-pressure tactics and promises of guaranteed returns, which should always raise red flags. It's essential to conduct thorough research and verify the legitimacy of any investment opportunities before committing your funds.
