Why you shouldn’t buy Bitcoin Over-the-Counter (OTC)

Kelvin Leong
Mar 20, 2018 · 5 min read

Increasingly, more individuals are trying to hop on to the rising cryptocurrency trends by attempting to buy and sell crypto.

You’ll probably see people around you — friends, peers, co-workers — doing buys and sells ranging from tens of dollars, to hundreds of thousands or even millions of dollars.

Most people buy through legitimate exchanges which are incorporated overseas and requiring international wire transfers and quite a bit of procedures, but an increasingly popular method of “trade” these days are actually what is called “OTC”.

What are Bitcoin Over-the-Counter (OTC) Purchases?

OTC purchases are essentially people, usually of the same locality “connecting” and agreeing on a price. This is then followed by a face-to-face meet-up where the transaction is carried out.

In essence the flow goes like this (assuming you’re the buyer):

  1. Buyer goes into a chatroom such as #CryptoSGOTC (well, for Singaporean trades, at least) on Telegram
  2. Buyer posts something like: “Buying $500 of ETH. Quote me on rates, please!” or “Buying $500 of ETH. GDAX +3%.” (GDAX is a popular crypto exchange)
  3. Buyer receives multiple Private Messages (PMs) from other potential Sellers who are looking to sell
  4. Each Seller probably has his/her own rates and/or conditions
  5. When Buyer agrees on which Seller to buy from, a location, usually public, is set: “Shall we meet at the Starbucks at Toa Payoh Hub, tonight 8pm?
  6. Both parties then co-ordinate the meet-up and show up at the agreed location, hopefully.
  7. Buyer shows proof of cash, Seller shows proof of funds.
  8. Seller transfers crypto, Buyer passes Seller cash.
  9. Both wait until transaction is confirmed by the respective crypto network, and then they both part ways.
  10. Finally, a deal is made….

Why do people buy cryptocurrencies Over-the-Counter then?

Well, in an ideal world, everyone would buy from exchanges — but it’s just so damned troublesome to do so these days. Exchanges are usually regulated or have to comply to local legislation which makes the whole process a pain.

International Wire Transfer? What?

What’s that? Can eat, one? Is this the one where you have to go down to the bank to fill up forms and SWIFT and IBAN codes and stuff? Wait, what are all these weird codes?

Unfortunately, most exchanges require actual funds to be transferred via the banking system. Credit card acceptance is frowned upon due to the possibility of a chargeback. If in the rare event it *is* accepted, crazily high fees are charged for the exchange to take the risk.

No KYC Required — just cash.

Exchanges, depending on their incorporation or operational locale, are subject to due diligence requirements.

They can involve complicated processes like:

  • Uploading a scanned copy of your passport with a selfie of yourself holding it
  • Sending over your CPF Contribution Statements and IRAS Notice-of-Assessment (NOA) documents for the past 12 months
  • Showing proof-of-funds such as payslips and employment contracts

Heck, the list of required documents goes on-and-on. It’s even more complicated than convincing your prospective mother-in-law to let you marry her daughter.

Buying OTC doesn’t require one bit of these complicated stuff. You can remain completely anonymous, nobody has to know your real name or identity. Nobody needs to know if you’re a rich heir, a government official, a socialite, or if you’re the average blue-collar John Tan Ah Kow.

Isn’t it dangerous buying OTC?

It sure as hell is!

There are way too many things which can go wrong when you’re carrying a huge bag of cash, waiting for someone to show up, and hopefully give you your crypto.

Robbery? That’s not possible.

Well, most people in Singapore generally believe that the environment is safe, and law enforcement is efficient.

But remember — the Seller knows you’re carrying a HUGE stash of cash with you, and you don’t even know if the seller has the cryptocurrencies that he or she claims to have.

What’s stopping the situation from going south?

Scams, scams, and more scams!

Ok, so the Seller says the crypto has been transferred to your wallet, and has a screenshot to proof it. He then says it’s going to take a while to show up on the network, maybe because it’s a little slow today.

..and then the Seller finds a reason to excuse himself — and he’s gone!

All you’re left is a doctored screenshot which his accomplice put together so that he can send it to you as “proof” of funds.

Yes, my friends, it’s 2018, and there are so many easy-to-use apps out there for image doctoring….

Long story, short — don’t do OTC.

Too many moving parts can make the whole transaction go awry. Don’t take the risk, despite the promise of “convenience” and anonymity.

Remember, if the Seller doesn’t know about you, it means you don’t know about the seller, too.

He or she could very-well be the last person you ever cross-paths with….. given the right (or in this case, wrong) motivations.

But then how will I get my crypto, then?

Well, if you want a hassle-free, anonymous yet secure way to buy your cryptocurrencies, check out *drum rolls*…. AngbaoShop.

It’s a brand new and very much awesome way for people in Singapore to buy crypto and get it delivered to their doorsteps! The crypto gets delivered in the form of a top-up card by a professional courier service company, and payment is collected as cash at your doorstep.

The crypto top-up values start at $28 and goes up all the way to $888.

Plus, it’s totally risk-free for you as the consumer, too!


Behind the Scenes & Thoughts of a Crypto Top-up Card…