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[Serious / US] How would one cash out ~$10 million worth of crypto?

Asking for a friend…. specifically in the US.

I’m thinking doing the limit orders on a reputable exchange can be done by yourself, but you probably want to call the bank and let the exchange know that a large amount of crypto is coming through. I would assume preparing some records of how you got these funds would be a good idea too? Any specifics? For us old time miners specifically records are sparse, most mining pools are dead, but I have some records of when funds hit my wallets and I did my best to estimate taxes.

**Edit:** Thanks for the OTC suggestions. I’m aware of them already. And even if I don’t use them, I would assume in my earlier post that just doing sales yourself is manageable. However, what I’m probably more worried about is moving the actual fiat amount out. Would you recommend contacting both the bank and exchange ahead of time to let them know? Doing a trial run with a smaller amount, say $50k?

I was logged into Bank of America the other day and found some fine print about some $1.5 million wire transfer limit but am unable to find that page again.

What do you think?

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44 Comments

  1. I can give you my personal experience on this. I cashed out about $5 million a few months ago. I didn’t use OTC, just a regular reputable exchange, where I made a bunch of limit orders and waiting for them to be hit, a checking account at a large bank where I wired the proceeds, and a brokerage account where the proceeds ended up.

    I could have figured out if my costs basis was $0.40 or $1.50 for each bitcoin sold, but I just didn’t bother. I’ve reported and will continue to report all ancient bitcoin as having a cost basis of zero. The IRS doesn’t seem to mind.

    I did contact my bank a few years prior to get a read on whether they would give me a hard time for shuffling a few million dollars through them, and whether funds coming from bitcoin proceeds would be an issue with them. While they stopped well short from giving me any guarantees, they indicated they had no fundamental issue with any of it, and as it turned out, they didn’t mind when I actually did it.

    It’s probably a good idea track all the addresses you’ve used on a spreadsheet, walk back each of your transactions on the blockchain, figure out which addresses were yours, which weren’t, and what each transaction from the latter to the former meant exactly. It’s useful when an exchange asks you questions, it’s useful when you prepare your taxes, and it would be useful if the IRS ever decided to audit you. My CPA has seen my little spreadsheet with those details, but so far nobody else has needed to.

    A couple of months after selling, my exchange contacted me to ask me for paper documentation on the origin of my coins. Alas Slush’s pool wasn’t really into paperwork back then, and even if they were, they would have had no idea who I was. So I handwaved that as best as I could, using a few details from my little spreadsheet, and somehow it has been enough to satisfy the exchange. YMMV.

    This is a simple, and perhaps naive approach. There are other ways to go about this. For example, /u/nullc wrote about [a more sophisticated approach to cashing out](/r/fatFIRE/comments/lz2kzs/how_to_sell_bitcoin_in_the_usa/gq1zrfj/?context=3), which involves options.

    The last piece I’d mention is that you’re going to be on the hook for 25% of your profits as federal taxes, plus whatever your state wants on top of it. If you’re interested in charitable giving, it could be a good time to look into Donor Advised Funds, and the ability to deposit appreciated assets into them as a way to both get a large tax deduction upfront and maximize your donated value. The DAF will typically sell the bitcoins you deposit right away, after which you’ll be able to (direct the DAF to) invest them into conventional instruments as you see fit. Oh, and start thinking about quarterly estimated taxes, they might start becoming suddenly relevant to you. Do you have a CPA? You probably should have a CPA.

  2. Deposit Bitcoin. Sell at exchange (intelligently, using limit orders, of course!). Wire money to bank. Set aside the right amount for taxes. Done.

    For just a few million you shouldn’t need to warn the bank of anything. If it makes you feel more comfortable, do it with a million first. If your goal is to move millions I wouldn’t recommend trials with under $50k lest you accidentally end up below some reporting threshold and get accused of structuring.

    Banks generally don’t care much if you move millions of dollars.

    You might get a “congrats on the sale of your home” kind of remark, but for the most-part they’ll be unfazed. You may trigger them to ask you to fill out some really generic KYC forms that will ask what your net worth is and what the source of your funds are. These don’t get hyperspecific, the level of detail you’ll be asked to provide is “investments”.

    For really old coins with a cost basis near zero, I recommend just using a cost basis of zero– it’ll hardly make any difference on your taxes and will leave the IRS with nothing to squabble with.

    Really your bigger source of problem and risks will be Bitcoin exchanges, not banks. Be wary of exchanges setting withdraw limits that force you to engage in activity the looks like structuring.

    Gemini and LedgerX work (personally, I’d prefer to deal with ledgerx but the the swap market isn’t really liquid enough to move a lot of volume through it at a reasonable price).

    Figure out where you’re going to ultimately move the funds to before you get started. Unless you have a specific reason to leave cash sitting around in a bank account– don’t do that. 2%/yr on $10M is around $500/day, so leaving the funds in a no-interest bank account is pretty expensive!

  3. OTC desks of the large exchanges will be able to execute sales of that amount better than going at it alone. I know Coinbase and Kraken have them but I’d check around

  4. In addition to the typical order book market, Gemini Exchange has a “block trade” market and daily auctions. These are designed for bigger trades, though liquidity is sometimes lacking.

    Unless you need the $10 million all at once, I recommend something like $1 million each day for 10 days. That would be much easier to do without slippage.

  5. Call your bank and give them heads up so the funds don’t get held up.

    Why would you have to record the source of funds? It’s a free country.

    Also, on $300K down payment vs $10 million example… keep in mind plenty of people are paying $10 million cash for a house in California. It’s not as uncommon as you seem to believe.

  6. Can someone please explain in simple terms. Let us say you sold your BTC for a million dollars on any of the exchanges for USD and want to withdraw it, are there any limits or restrictions by those exchanges to withdraw all 1 million to your bank account ?

  7. Plot Twist : He calls himself “A Friend” to prevent his friends fro knowing that he is a True HODLer and a multi-millionaire!

    Jokes apart, your friend is a true diamond hand HODLER!

    I guess maybe he is in some serious issue or maybe taking money out to have fun or stuff but I do have a huge respect for him for Pulling off some good amount of crypto back in it’s initial days and being part of this revolution!

  8. You’re telling me that they’ve mined over 10 mm worth of crypto and don’t know how to cash out?

    Sounds weird, but maybe that’s just me. Anyways, as another commenter has mentioned, OTC, in particular I’d recommend Kraken OTC.

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  10. The IRS will need to know every transaction you made in crypto when you file your income taxes. Every USD moved electronically is reported to the IRS by the Federal Reserve.

  11. If it were me I would contact a financial advisor for a amount that exceeds a banks limit, Why walk in and try to execute a large transfer at the bank with a bunch of advice from reddit?

  12. Well, for one thing I wouldn’t do it with any of these major banks.

    Most importantly the first thing that I would do is quickly find the best possible lawyer.

    You can bet your ass the government and banks would try to take every dime of that money and claim any violation they can. They don’t even need to use a real one. They can and will be happy to make it up and won’t give the money back for years (if ever) if they want. Has been done before and the government is so corrupt it won’t happen any less.

  13. A trial run sounds great. Do a number of amounts gradually building up to 50 k. Contacting your bank to help u confirm the money arrives is good, too, i think.

    On a not so serious note, I’m happy to give u my bank details and u send some money to me. I’ll tell u when it’s there :p :p

  14. OTC would be the way to go. Also the bank may report the transaction as “suspicious “ only because of the dollar amount. Even if broken up into smaller chunks they still may question. Some banks and credit unions are flaky like that. I’d set up an appointment with client services at the branch if you’re truly looking to do this just to see what they do and how it could be handled

  15. If you put limit order of 300btc at once, you will have a wall visible to all mankind and I doubt it will ever be executed as it will cause some fears. Yes 300btc is nothing to Bitcoin if you sell them gradually, however, it’s something noticeable like a man with 12” erection if you place them at one limit order.

    Looking at coinbase pro daily trading volume, you could easily sell them all in one day, gradually of course. Maybe 1btc every minute depends on your targeted price. Few hours and you should be done.

    For withdrawal, and if I was you, I would definitely contact both the exchange and the bank ahead. Get someone specifically from both parties direct contact information in case something goes wrong you can get back to and follow up with them immediately. I would do 1m at first and see how it goes and how much time it takes. If it goes smooth, I would do the 9m right away next.

    Please keep us posted.

  16. Look up Mark Kohler on YouTube and follow his strategy to not pay taxes on those profits. He essentially he donates the bitcoin to a charitable trust who the buys an annuity that pays you for the rest of your life. Then you buy life insurance with part of the annuity so when you die the entire amount the bitcoin was worth goes to your heirs tax free

  17. Call BoA, get ahold of the wire transfer folks and have them make note of it on the account, then ask if there is anything else to do.

    As an aside, a million bucks in USDC earning interest staking would bring in a hefty amount of money each month vs being cash in a savings account or whatever.

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