How has OTC developed in major exchanges (and by the way, let me share my own entry into the industry and whether one can still participate in the OTC sector)?

Many people ask me if I can help them with OTC, and for almost everyone, I advise them not to get involved. Some say they are worried I might be stealing their business, and I really find that amusing.

Because this industry has high costs, low profits, and significant risks.

Let me tell you about the development history of exchanges:

1. Forum Economy: Early Bitcoin holders matched demands through posts on forums like Bitcointalk, with a trading model similar to second-hand goods trading, essentially bartering.

This lack of third-party guarantees led to fraud cases like "sending coins before payment" (a typical case: the surge in OTC scams before MT.GOX's bankruptcy in 2013).

2. Public Trading: Later, platforms like Yuanbao.com emerged, allowing direct payments to public accounts for buying and selling.

Before 2017, the mainland was developing normally, but in 2017, the 94 ban was issued, prohibiting any institutions or companies from engaging in virtual currency business. However, private trading was not banned.

Thus, coin dealers emerged!

A large number of OTC coin dealers appeared, providing fiat currency trading to profit from the price difference. It was at this time that I saw the opportunity to enter.

Now let me talk about myself—why I entered the market so early and haven't exited yet, still working coolly. To be honest, I did try to exit once.

I must mention a person: Zhao Dong, co-founder of Moji Weather. After successfully starting his business, he sold his shares and later founded Garage Coffee, where he met some of China's earliest Bitcoin participants like Wu Gang, Li Lin, and Li Xiaolai. In 2013, Zhao Dong invested 10 million from Moji Weather into Bitcoin, and his net worth skyrocketed to over 100 million. However, he later leveraged in Bitcoin futures trading and faced liquidation, losing not only his fortune but also incurring 60 million in debt.

To repay his debts, Zhao Dong entered the OTC trading field, starting with small profits and gradually accumulating funds. At that time, the market depth was insufficient, and he took on all kinds of trades, earning 50 to 60 yuan per small transaction, slowly accumulating funds to repay his debts.

My early team got involved in OTC trading at Huobi, establishing a complete trading process. The team had partners with banking resources, a complete reconciliation system, and a self-developed mini-program for real-time reconciliation, payment collection, and fund flow monitoring. The team consisted of 14 members, each with specific roles such as finance, market operators, transfer personnel, reconciliation staff, and fund allocators.

Initially, Huobi had three blue shield merchants and seven ordinary merchants, while OKEx only had three accounts. Binance had no traffic at that time. When Binance was building its OTC function, our team submitted a detailed operational report and successfully became one of the eight founding merchants (only eight slots available). The key account manager promised that all eight accounts would be master accounts, and all later merchants could only operate under these eight accounts. At that time, an original merchant slot was speculated to be worth 8 million yuan (actual transaction price was 2 million).

At this point, Zhao Dong offered 8 million to acquire our team, wanting to gain our operational and risk control systems (he himself had a very chaotic account due to rapid expansion and complex fund flows, often leading to miscalculations). However, he wanted us to operate the team in Singapore, but due to mask-related reasons, we couldn't go out, so it turned into a partnership model.

Zhao Dong was involved in currency exchange operations, with 5-6 people making a profit of 1 million yuan a day. To quickly recover funds, he asked trusted merchants to first provide USDT, and when funds were needed, they would transfer the money to designated accounts. Thus, our team directly sourced from him, using our own bank cards, with daily transactions of 20-40 million, earning only a penny profit per USDT, resulting in an annual trading profit of around 10 million.

The money earned was misled by the exchange's key account manager, who said that platform tokens had weight, and the more you bought, the greater the support, especially for Binance. As a result, everyone used their profits to buy BNB and HT, with costs at 3-4 USDT, and each account had to keep a margin of several hundred thousand. Suddenly, the prices surged about tenfold, turning into a small target. Due to various unclear policies, in April 2020, Zhao Dong was investigated for suspected illegal business operations, and in June, he was approved for arrest, leading to the dissolution of our OTC team.

Every day, you could see young models in clubs; I was really tired of it.

Every day, you were suffocated by young models. If I had done Twitter back then, I would have been eating melons every day. In terms of cost-effectiveness and various aspects, Chongqing was definitely number one.

Before 2020, there was basically no black money or frozen cards, and payment methods varied widely, with personal bank cards, Alipay, corporate Alipay, and various payment methods taking turns. Some coin dealers had hundreds of Alipay accounts and over a hundred bank cards nationwide, with almost no risk control.

At that time, many big teams were born (Old Ma, Lightspeed, Little Yellow Duck, Little Cutie, In the Wild, Dali, and me), truly starting from scratch with a capital of 10,000 yuan and accumulating profits to tens of millions or even over a hundred million.

Then, one cannot remain idle, so we invested in mining machines. The ban on mining issued by nine ministries led to some partners secretly starting machines and getting reported. All mining machines in Sichuan were confiscated overnight, returning to zero, as I had also asked friends and relatives to invest. I ended up losing all their money.

Although it was painful, as the saying goes, a dead camel is still bigger than a horse; it doesn't affect the overall situation.

With resources from the crypto circle, I quickly recovered because I knew Ice Frog Lao He, who was first involved in the airdrop industry. As the founder of Apache, he entered the community field. With my professional knowledge, I re-entered as a Twitter KOL. That was when OTC was still playable, and I hatched a large number of OTC projects with Liu Shu. The legal sector of the crypto circle is also advancing. In the meantime, inscriptions and others also returned a significant amount of blood.

Let me explain why I say that newcomers cannot engage in OTC now.

First, bank flows are subject to risk control at any time (requiring banking resources).

Then there are customer resources. Platforms? You can't see prices that are higher than buying prices; how can you make a profit?

Risk control and black money (requiring a lot of time and experience accumulation).

So now, those who can work in coin trading must have industry resources. They are also slowly transforming into private domains.

Truly reliable and familiar coin dealers are also a form of quality resource.

Finally, thanks to everyone for your support. For withdrawals, add me on WeChat: otcxiaoxiao for frozen package compensation and after-sales service.

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