Typically the stocks that trade in OTC markets (aka pink sheets) are for small or defunct companies not the kinds of big public companies you may be familiar with. Buying a lot of some penny stock, hyping it up, and then dumping it on people is not a particularly sophisticated or new way of defrauding people, though in this case the scheme was a little more involved. You don’t need billions of dollars to buy a lot of the shares of one of these companies.
Yeah OTC trading is almost exclusively fraud. It's the model for crypto trading. A knowledgeable investor has no reason to invest in OTC, and naive investors don't even know how.
OTC exists in all markets, it's called a "dark pool". It's funny how little people know about more traditional markets but everyone thinks crypto is full of fraud. If you guys did more stock trading you'd know how bad it is. A former chairman of NASDAQ called Bernie Madoff is literally a convicted ponzi scammer.
I think this definition of OTC is a bit confused. OTC Markets is a company that runs platforms for trading the stocks that only trade OTC (ie not on public exchanges). It is also true that there are ways to trade other securities OTC (and dark pools are one) but I think the parent commenter was talking about activity in the stocks that only trade OTC. The nomenclature is pretty stupid though.
Some of us know that crypto must be full of fraud because there’s so much fraud in traditional markets, despite regulation and oversight that crypto doesn’t have at all.
For the common wo/man there is more oversight in open ledgers as compared to backdoor deals. You can of course trade on some shady sites registered in the Cayman Islands, or you can use a decentralized exchange where there can't be backdoor deals. In theory crypto would be a regulator's dream, since everything can be automated and remotely audited. However, for the very reason that it would make fraud harder to hide, there are going to be a lot of rich and powerful people against it. Firms like Citadel are happy and comfortable with the status quo.
I don’t think this theory of what financial regulators want matches the things they actually care about or considers that they already have access to the ledgers, or at least most of the important ledgers, even if the public doesn’t. I disagree with your opinion about levels of oversight.
I disagree with your blanket statement on fraud. Pink sheets are a portion of what trades OTC. There are other types of securities like F-shares (foreign listings that trade in USD) and other trusts.
GBTC: the only bitcoin fund in the US trades OTC. (NB: trades at a massive premium so you're better off trading the underlying)
