The partnership began at 10 a.m. Eastern time (15:00 UTC) Wednesday. It offers traders more access to price discovery in a thinly traded cryptocurrency market that lacks transparency. It also allows traders to view comparative pricing with exchanges and over-the-counter markets.
B2C2, a London-based over-the-counter (OTC) market maker, is sharing its data and allowing transactions on the Los Angeles-based exchange aggregator SFOX.
Price discovery is the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers.
The B2C2 OTC price feeds available on SFOX are the platform’s supported BTC/USD, ETH/USD, LTC/USD and the BCH/USD trading pairs.
Estimated by research firm Alite Group to be over 65 percent of the overall cryptocurrency market, OTC trades are transactions that don’t take place in a standard exchange. They generally range in size between $50,000 and $250,000 in cryptocurrency and are often much larger.
SFOX aggregates – that is, combines – exchange order books to give traders better pricing and help with “slippage” issues. A big problem on many cryptocurrency exchanges, slippage is when a trade participant receives a different trade execution price than expected. Adding B2C2’s OTC pricing is expected to increase liquidity, in turn helping to solve the slippage problem.
OTC trades in crypto tend to be more expensive than exchange prices. One of the reasons is that OTC desks bake in fees to price, whereas exchanges take their transactional fees at execution. The B2C2-SFOX partnership allows traders on their platform to view comparative pricing with exchanges and OTCs.
Unlike exchange-based trading, volume and liquidity are much harder to track with OTC deals since they happen via email, phone or messaging apps like Telegram or Skype. SOFX expects B2C2’s data feed will provide more transparency by offering a glimpse into the OTC market, even by showing small-sized orders.
B2C2’s software offers more flexibility than a manual desk that takes in and delivers orders. Such automation lets the firm execute trades worth as low as $1,000 around the clock, B2C2 CEO Max Boonen told CoinDesk.
Though tiny trades seem arbitrary, they are many times the product of algorithms from various aggregators such as SFOX at work on exchange order books. Such regular flow of orders give better pricing information.
After going through Silicon Valley’s YCombinator startup accelerator in 2014, SFOX originally started out by providing OTC services using its algorithmic technology.
Meanwhile, B2C2 has been a player in the OTC world since 2016. However, they are more known for serving the European market.
Thus, the pairing doesn’t just give the U.S.-based platform access to OTC pricing but also a sense of where Europe is trading the largest cryptocurrency market pairs.
25-Year-Old to Plead Guilty to Running Unlicensed Crypto Exchange
A 25-year-old man from Westwood, Los Angeles, is said to plead guilty to federal charges for having exchanged up to $25 million in cash and crypto without a license and anti-money laundering program.
Kunal Kalra, also known as “Kumar”, “shecklemayne” and “coinman”, was indicted on Friday for allegedly trading cash and crypto for individuals including drug dealers, partially via his bitcoin ATM kiosk.
An announcement from the U.S. Justice Department last Friday said Kalra, who is expected to make his first court appearance next month, has agreed to plead guilty to the charges.
The announcement said Kalra ran an unlicensed crypto exchange business from May 2015 through October 2017. He admitted in his plea deal for having exchanged bitcoin for cash from criminals including drug dealers who obtained the cryptocurrency from selling narcotics on the darknet.
The justice department went on to say that without implementing an anti-money laundering program, Kalra facilitated such type of transactions with a commission while knowing the proceeds came from drug trafficking.
As part of the investigation, the law enforcement seized about $889,000 in cash from Kalra and about 54.3 bitcoin and other cryptocurrencies, worth more than half-million dollars. The announcement said the maximum penalty Kalra could face is to serve a life time behind bars.
Meanwhile, a 32-year-old Australian national living in the state of Colorado has been sentenced to one year in jail after being convicted for money laundering with bitcoin, based on a U.S. Justice Department release also on Friday.
The convict, named Emilio Testa, facilitated trades between bitcoin and cash with undercover agents while knowing the proceeds were part of narcotics trafficking.