What is an Escrow?
An escrow is a financial arrangement where a third party (the Escrow Agent) holds and regulates payment of the funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all of the terms of an agreement are met as overseen by the escrow company.
Escrow & Cryptocurrencies
Cryptocurrencies are no different to any other type of asset. When two parties want to complete a large Transaction the person moving first (buyer transferring fiat currency or seller transferring cryptocurrency) is at the greatest risk. Using a reputable Escrow Agent can greatly reduce this risk.
Types of Escrow Agents
Escrow Agents come in all shapes and sizes. They range from individual solicitors through to listed multi-national corporations. It still surprises us to see Buyers and Sellers insisting on small, unknown Escrow Agents when there is little recourse or change of recovery if something was to go wrong. We only use and recommend Tier-1 Escrow Agents with billions of dollars under management.
How Does it Work?
We recommend the use of escrow when the transaction size exceeds $5m USD. The process is relatively simple:
- Buyer and Seller agree on the Terms of the Transaction and execute a Sale and Purchase Agreement;
- Buyer, Seller and Escrow Agent execute an Escrow Deed;
- Buyer deposits funds into the Escrow Account with the Escrow Agent;
- Escrow Agent confirms receipt of funds and provides evidence to the Parties;
- Seller transfers Digital Currency to the Buyer; and
- Escrow Agent releases the Purchase Price to the Seller.
Oneify is highly experienced at organising and facilitating escrow transactions. We have high-level relationships with large, reputable and independent Escrow Agents who accept Digital Currency transactions. We have template Sale and Purchase Agreements and Escrow Deed’s professionally prepared and ready for review by your legal representatives.
IMPORTANT: Don’t be convinced to use a small Escrow Agent (and this includes law firms!) Do they have billions under management? Are they licensed escrow agents? Are they insured? Do they operate in industries outside crypto? Selling cryptocurrencies is not difficult. There are tried and proven processes that have been used for hundreds of year to trade gold and commodities through to source code and intellectual property. Don’t become another horror story.
Buyer – The individual or entity purchasing Digital Currency.
Seller – The individual or entity selling Digital Currency.
Parties – The Buyer and the Seller collectively.
Terms – The details of the transactions agreed between the Parties and as outlined in the Sale and Purchase Agreement.
Transaction – The sale and purchase of Digital Currency.
Sale and Purchase Agreement – Formal agreement outlining the Terms of the Transaction.
Escrow Agent – The entity mutually agreed upon by the Buyer and Seller to administer the Escrow.
Escrow Deed – Formal agreement outlining how funds are to be held and released by the Escrow Agent.
Escrow Account – Bank account controlled by the Escrow Agent on behalf of the Parties.
Digital Currencies – The asset being transferred under the Transaction.
Purchase Price – The amount mutually agreed by the Parties for the Transaction.
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