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Comment by phire | Hacker News Reader

Hmm... Bitprime have grown since the last time I was paying attention. 20 employees....

For some context, a few years ago, they only did OTC trades (you ask for a quote and have a few hours to confirm the price and send the funds), with quite a large minimum of a few thousand. You only really delt with them if you wanted to on-road or off-road large amounts of New Zealand dollars. They didn't even run their own crypto wallets or have any infrastructure. They would just run accounts on larger crypto exchanges (binance?) and manually confirm deposits.

Looks like they have updated their process recently to be more automated so they can accept lower minimums, but their process apparently hasn't changed. They still don't hold customer funds and only trade between crypto and NZD.

It's entirely possible they ran into problems because their model isn't compatible with large downward volatility. Or maybe an exchange froze their account?

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Who is the target market for such a service?

yes

...?

There are plenty of crypto exchanges that only deal with crypto. Or only have on/off ramps for some local currency that isn't really practical for people outside of that one country.

Bitprime allowed people in NZ to easily transfer value in and out of those exchanges. Or directly into a wallet for other services (i.e. buying NFTs or paying ransomware), or to hoddle.

Generally OTC desks are useful for large purchases. Let's say you want to acquire $100 million in Bitcoin - you could go to Coinbase and just do it, but you'd drastically move the market, have a really obvious candlestick, and an observant third party could look for large movements from Coinbase and potentially track your holdings / de-anonymize you.

An OTC desk can be setup to spread the buy over several days / months, buy across markets, and optimize for best price execution. It's not necessarily a huge business, but a lot of businesses and high net worth individuals will use these types of services instead of trying to learn the skills themselves.

Do most exchanges also run OTC desks or is the OTC desk generally a special type of exchange?

Not exchanges. The reason is that, as GP indicated - oftentimes execution is spread across venues.

This is typically a role of a dedicated broker house or there is a special area in many investment banks that takes care of that as part of customer flow handling.

Usually OTC desks are seperate and are part of a prop trading firm.

It can be a service offered by an exchange or by another company. Coinbase and Binance have OTC desks, for example.

How many high net worth individuals can their possibly be in New Zealand?

It's a country of 5M. High Net Worth is usually top 0.1% (100M+) - that's like 2k families.

Or would foreigners use this service for some reason?

Many billionaires have their prepper mansion in NZ.

Someone who doesn't want to keep funds on exchange but needs instant liquidity for any amount.

Also, the best OTCs tend to be failure tolerant: website down or DDoS'd? Doesn't matter, you talk on Signal or WhatsApp or Telegram.

The reasons for OTC desks is that if an individual wants to buy, say $100m of an asset, it's likely that they need to buy from multiple sellers.

If you do that by buying $10k x 10k transactions, your demand will increase the price of the asset and mean you pay more than current price for no good reason.

OTC desks either collect the $100m from large holders in big blocks, or they use working capital to constantly buy the asset and sell it for a single quoted price (hoping to gain on arbitrage).

In this particular case, they also offered the unique service of accepting /nzd vs. EUR/USD/JPY/KRW

> unique service of accepting /nzd vs. EUR/USD/JPY/KRW

Which could possibly be the reason why they are in trouble? The NZD has been dropping against USD over the last while, so any uncovered delays could hurt their margins?

To add: BitPrime was a very small operation. They do have 22 people on their about us page, but I would guess most of those are founders, sweat-equity, or intern-like (few salaried, even though salaries in NZ are wayyy lower than US).

> wants to buy, say $100m of an asset

https://www.bitprime.co.nz/about-us/ says:

  Victories
  Crypto Bought:2M+
  Crypto Sold: 90M+
  Users: 30K+

Very small. This isn't a sign of cryptogeddon.

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