Thousands of credit cards frozen for buying Bitcoin? Make no mistake, OTC trading is not the same as OTC trading

Crypto钟良 · 2023-08-22T11:03:32.000Z

In early June, news about the “frozen card wave” began to spread in the currency circle. In fact, frozen cards often happen, but it is relatively rare to have thousands of frozen cards like this one. According to media reports, the core reason for this freezing of cards is that telecommunications fraud and funds have been severely investigated by the police recently. In particular, the actions of the Dongguan police have resulted in a large number of bank cards being frozen, and the off-site USDT trading area is used for funds involved in telecommunications fraud. As the hardest hit area for money laundering, the OTC trading area of the exchange has also been affected. You may be wondering, isn’t OTC trading just the exchange OTC trading? What’s the difference? In fact, the OTC market (also called OTC, C2C, legal currency trading) generally refers to the buying and selling of cryptocurrencies through all channels other than exchanges. For example, we buy and sell Bitcoin on WeChat and Telegram groups, and trade Bitcoin through over-the-counter brokers and intermediaries, including exchange OTC transactions, which are also part of over-the-counter transactions.

In early June, news about the "card freezing wave" began to spread in the cryptocurrency circle. In fact, card freezing happens all the time, but it is still relatively rare to freeze thousands of cards as rumored this time.
According to media reports, the core reason for the card freezing this time is that telecommunications fraud and Ponzi schemes have been strictly investigated by the police recently, especially the actions of the Dongguan police, which led to a large number of bank cards being frozen. In addition, the over-the-counter USDT trading area is a hard-hit area where funds involved in telecommunications fraud are used for money laundering, so the exchange's OTC trading area has also been affected.
You may wonder, isn’t over-the-counter trading the same as OTC trading on exchanges? What’s the difference? In fact, the over-the-counter market (also called OTC, C2C, and fiat currency trading) refers to the buying and selling of cryptocurrencies through all channels outside of exchanges. For example, we buy and sell Bitcoin in WeChat and Telegram groups, and trade Bitcoin through over-the-counter brokers and middlemen. OTC trading on exchanges is also part of over-the-counter trading.
According to an exchange insider, in this so-called card freezing wave, for example, thousands of cards were frozen at over-the-counter (OTC) merchants, and less than 50 OTC merchants at the affected exchanges had their cards frozen.
From the above figure, it is not difficult to find that OTC transactions cover a very wide range, with huge trading volumes. To a certain extent, they are opaque and not paid much attention by the public.
For example, many investors will add friends to trade in WeChat groups, QQ groups, and Telegram groups, or trade through OTC intermediaries, OTC brokers, through exchanges OTC transactions, or even offline face-to-face transactions, all of which are considered OTC transactions.
Among them, the most prone to problems is the transaction of cryptocurrencies through telecommunications networks such as WeChat, QQ, and Telegram. Since these networks are closely related to crimes such as telecommunications fraud and gambling, they are a major crime-stricken area.
For example, there are all kinds of people who receive/send USDT anonymously in QQ, WeChat, and Telegram groups, promising "super high" returns, usually with a difference of several cents per U, and asking you to buy U for them with your real name. You must not accept such orders (and you can't touch various U running platforms). If you use your real-name information to help them trade, you will be frozen and investigated. There is a high probability that you will receive first-hand black money in such transactions.
Generally speaking, the sources of black money are mostly from the following channels: pyramid schemes, illegal fund-raising, and online fraud. Moreover, these people now know how to use digital currency to launder money. The common characteristics of these types of black money are: a large number of victims and a wide range of regions. Once the black money flows into the OTC area of ​​the exchange, it will cause a large number of card freezes.
Moreover, there is cross-platform arbitrage in the funds of the exchange OTC area, so cross-infection is very likely to occur. For example, the exchange OTC area is like a retail wholesale market. The better the liquidity and depth, the more merchants there are, and the coin price may be slightly lower than other platforms. It is human nature to sell high and buy low. So when a user sells coins at a high price on platform A and then buys coins at a low price on platform B, at this time, there may be a crossover of money on the two platforms, and there may be a problem with a certain amount of money on platform A. When it reaches platform B, it will cause the users of platform B to be frozen.
For example, the picture of OTC merchants freezing their cards that circulated online some time ago was said to be about a merchant who received black money from telecommunications fraud and the money flowed into the OTC area of ​​the exchange, causing more traders to have their cards passively frozen.
This is cross infection. Even if a small amount of black money enters the OTC area of ​​the exchange, the relevant traders will most likely have their cards frozen.
But freezing your card is not a big deal. When the police detect the flow of black money, they will freeze all the accounts in this capital chain. If we don’t want our card to be frozen, we can only avoid it in advance and try not to trigger these situations. If your card is really frozen, it will only be a matter of time. There is no need to panic, let alone spread rumors about it.
For most OTC traders, they should be fully aware of the risks of OTC trading, and don’t trade in unknown coins for cheap. Instead, it is more secure to choose to trade in the OTC trading area of ​​a formal large platform.