OTCM Protocol — LightPaper
OTCM Protocol is the world’s first permanent, compliant, 24/7 trading infrastructure for illiquid equity securities. Over $50 billion in shareholder value is trapped in U.S. OTC markets where companies have lost market maker support and shareholders cannot sell at any price. OTCM Protocol solves this permanently — not through regulatory exemption, but by automating the full weight of U.S. securities law with mathematical precision on every transaction.
1. The Problem — $50 Billion in Value, Trapped
Over 11,000 U.S. companies trade on over-the-counter (OTC) markets. Millions of their shareholders legally own their securities — but cannot sell them at any price. These shares are not fraudulent. They are properly registered with the SEC. Yet because these companies lost market maker support or Rule 15c2-11 regulatory eligibility, their shareholders are frozen in positions they cannot exit.
Metric | Scale |
Trapped Shareholder Value | $50B+ |
Illiquid OTC Companies | 11,000+ |
Affected Shareholders | 5,000,000+ |
OTC Companies Without Market Maker Support | ~90% |
Companies Losing 15c2-11 Eligibility Annually | 500–1,000+ |
Annual Compliance Costs Forcing Abandonment | $25,000–$75,000+ |
The Vicious Cycle of Abandonment
• Eligibility Lost — Company falls below SEC reporting thresholds → trading halted, no quotes published
• Market Maker Exits — No broker will quote or trade the stock → bid/ask spread becomes infinite
• Capital Freeze — Company cannot raise funds, issue equity, or attract talent → share value collapses
• Abandonment — Directors resign, filings lapse, company goes dark → shareholders permanently trapped
• No Exit — Traditional solutions cost $100K+, take 12 months, and usually fail
This is not theoretical. OTCM Protocol was born when Groovy Company, Inc. — our parent company — lost 15c2-11 eligibility, trapping 18,000+ of its own shareholders. We built the solution we needed.
2. The Solution — Permanent Markets Where None Exist
OTCM Protocol creates ST22 Digital Securities — blockchain representations of real equity securities, formally classified as Digital Securities under SEC Release No. 33-11412 (March 17, 2026), backed 1:1 by shares held in custody at Empire Stock Transfer, an SEC-registered transfer agent and qualified custodian.
Investors trade ST22 Digital Securities on CEDEX, our purpose-built compliant exchange, 24 hours a day, 7 days a week, 365 days a year. We are not disrupting functioning markets. We are creating permanent markets where none exist. We do not circumvent securities law — we automate its enforcement with mathematical precision.
How It Works — Step by Step
Step | Who Acts | What Happens |
1. Issuer Applies | Company / Issuer | Submits application via the OTCM Issuer Gateway |
2. Due Diligence | Empire Stock Transfer | Corporate KYC, officer verification, legal review by Legal Counsel UPDATED V8 |
3. Shares Custodied | Empire Stock Transfer | Common Class B Shares custodied — 1 share per ST22 token minted UPDATED V8 |
4. ST22 Tokens Minted | OTCM Protocol | ST22 Digital Securities created on Solana with 42 security controls on every transfer |
5. Reg D Offering | Empire Stock Transfer | Accredited investors complete KYC/KYB/AML/OFAC/Wallet Verification — Empire is sole onboarding authority |
6. Trading Opens | Investors | Empire-verified investors trade ST22 tokens on CEDEX — 24/7, globally |
7. Issuer Receives Proceeds | Issuer | 95% of gross subscription proceeds remitted to issuer in USD |
8. Redemption | Token Holder | Holder may redeem tokens for underlying custodied shares via Empire at any time |
What Makes This Different
Feature | Traditional OTC / Crypto DEX | OTCM Protocol |
24/7 Trading | ✗ | ✓ |
SEC Compliant — Release No. 33-11412 | ✗ | ✓ |
KYC/AML Enforced on Every Transfer | ✗ | ✓ |
1:1 Real Equity Asset Backing | ✗ | ✓ |
Liquidity Withdrawal Impossible | ✗ | ✓ |
No Market Maker Required | ✗ | ✓ |
Global Accredited Investor Access | ✗ | ✓ |
SEC-Registered Custodian | ✗ | ✓ |
3. The Technology — Nine Layers. One Mission.
OTCM Protocol is built on Solana — 65,000 transactions per second, near-zero fees (~$0.00025 per transfer). Our platform adds nine specialized layers, each solving a specific part of the compliance and liquidity problem.
Layer | Name | What It Does |
Layer 1 | Solana Foundation | 65,000 TPS settlement layer · ~400ms finality · the only chain with native Transfer Hook support |
Layer 2 | Transfer Hooks — 42 Controls | 42 security controls enforced atomically inside the Solana runtime on every ST22 transfer — mathematically impossible to bypass |
Layer 3 | Global Unified CEDEX Liquidity Pool | Single protocol-owned liquidity pool shared by all ST22 issuers · funded by OTCM Treasury + staking reinvestment · LP tokens burned — withdrawal impossible |
Layer 4 | Custom AMM Engine | Purpose-built CPMM with u128 arithmetic for compliant Digital Securities — no rounding attacks |
Layer 5 | CEDEX Exchange | The only trading venue where SPL Token-2022 Transfer Hook compliance is preserved on every trade |
Layer 6 | Oracle Network | Real-time: 1:1 custody attestation, OFAC sanctions, AML scoring, TWAP price data, EDGAR intelligence |
Layer 7 | Protocol Governance | 3-of-5 multi-sig (adjustable params) · 5-of-9 multi-sig (upgrades) · 42 Transfer Hook controls immutable |
Layer 8 | Wallet Infrastructure | Native iOS/Android securities wallet · KYC/AML at onboarding · Ledger/Trezor hardware wallet support |
Layer 9 | Predictive AI Module | Scans 15,000+ OTC companies daily · IDOS scoring · identifies accredited investors · XGBoost ML engine |
42 Controls on Every Transfer — The Security Model
Every ST22 token transfer triggers Transfer Hook controls that execute inside the Solana runtime before the transaction completes. These are not policies — they are protocol invariants. Any control failure auto-reverts the entire transaction. There is no bypass path.
Control Category | What It Enforces |
Identity & Compliance (Controls 1–15) | KYC status · accreditation verification · AML risk scoring · OFAC/SDN screening · Empire-verified wallet whitelist |
Market Integrity (Controls 21–26) | Circuit breaker (>10% move in 5 min) · 2% price impact limit · velocity limits · Rule 144 holding period (Control 24) |
Custody Verification (Controls 27–30) | 1:1 token-to-share attestation verified every ~400ms via Empire Stock Transfer oracle |
Governance & Regulatory (Controls 31–42) | Multi-sig parameter governance · regulatory compliance freeze (Control 42 — Legal Counsel authorization required) UPDATED V8 |
4. The Market Opportunity
Market Segment | Estimated Trapped Value |
U.S. OTC Expert Market (no quotes published) | $25–$30 Billion |
U.S. OTC Grey Market (no market maker) | $10–$15 Billion |
International Illiquid Securities | $15–$20 Billion |
Total Addressable Market | $50+ Billion |
Revenue Model — 5% Transaction Fee on All ST22 Transactions
OTCM Protocol charges a 5% fee on every ST22 Digital Securities transaction — applied identically at both the primary offering phase (Reg D capital raise) and all secondary market trading on CEDEX. There are no subscription fees, listing fees, or access fees.
Fee Component | Rate | Mechanism |
Global Unified CEDEX Liquidity Pool | 0.44% of each transaction | Permanently locked by immutable Transfer Hook — not withdrawable by any party ever |
OTCM Protocol platform revenue | 4.56% of each transaction | Funds infrastructure, compliance, development, and staking rewards |
Issuer secondary market share | None | Issuers receive 95% of primary raise proceeds only — no ongoing secondary fee share |
Five-Year Revenue Projection
Year | ST22 Issuers | Annual Volume | Protocol Revenue (5%) |
Year 1 | 50 | $182.5M | $9.1M |
Year 2 | 200 | $730M | $36.5M |
Year 3 | 500 | $1.83B | $91.3M |
Year 4 | 1,000 | $3.65B | $182.5M |
Year 5 | 2,000 | $7.30B | $365.0M |
Issuer Economics
Issuer Pays | Issuer Receives |
$1,000–$25,000 one-time ST22 minting fee | Permanent, compliant, 24/7 secondary market on CEDEX for shareholders |
Common B shares custodied at Empire UPDATED V8 | 95% of primary Reg D offering proceeds in USD (5% fee deducted at close) |
15–21 business days onboarding timeline | Access to Empire Stock Transfer’s full KYC/KYB/AML investor onboarding infrastructure |
5. Regulatory Posture — Embrace, Don’t Evade
OTCM Protocol’s competitive advantage is radical regulatory transparency. While other crypto projects try to avoid securities classification, we built our entire architecture around it. ST22 Digital Securities are formally classified as securities under federal law from inception.
SEC Release No. 33-11412 (March 17, 2026) · SEC Joint Staff Statement (January 28, 2026)
“The format in which a security is issued or the methods by which holders are recorded (onchain vs. offchain) does not affect application of the federal securities laws.”
These statements directly validate OTCM Protocol’s SEC Category 1 Model B architecture: Empire Stock Transfer maintains the authoritative master securityholder file; the Solana blockchain serves as the operational notification layer.
Regulatory Framework | OTCM Protocol Implementation |
SEC Category 1 Model B | Empire Stock Transfer = authoritative master securityholder file · Solana = notification layer |
Release No. 33-11412 — Digital Securities | ST22 tokens formally classified as Digital Securities — the authoritative classification governing all CEDEX trading |
Reg D (US accredited investors) | Primary offering to verified accredited investors · general solicitation permitted · Form D within 15 days UPDATED V8 |
Reg S (non-US investors) | Non-U.S. investor offshore transaction framework · 12-month compliance period enforced by Transfer Hook Control 24 UPDATED V8 |
Bank Secrecy Act / AML | Full KYC/KYB/AML at investor onboarding by Empire + Chainalysis KYT + TRM Labs on every transfer |
OFAC Sanctions | Real-time three-layer SDN screening on both counterparties to every ST22 transfer |
Transfer Agent Regulation | Empire Stock Transfer (SEC §17A registered) holds custody · OTCM Protocol holds no investor assets directly |
6. The Team — Built by People Who Lived the Problem
Name | Title | Role |
Berj Abajian | CEO | Protocol vision, strategy, and investor relations |
Patrick Mokros | COO · President, Empire Stock Transfer | Operations, partnerships, platform growth, and investor onboarding authority |
Frank Yglesias | CTO | Technology architecture, Solana development, Transfer Hook infrastructure |
Legal Counsel | Legal Counsel | Legal framework, Reg D/S compliance, SEC Crypto Task Force engagement, country-specific rollout UPDATED V8 |
John Morgan | VP of Issuer Services | Issuer onboarding, ST22 launch process, issuer relationship management |
Key Technology Partners
Partner | Role |
Empire Stock Transfer | SEC-registered transfer agent and qualified custodian · sole investor onboarding authority · authoritative master securityholder file |
Helius RPC | Dedicated Solana RPC cluster · sub-400ms oracle sync · real-time WebSocket state feeds |
Chainalysis KYT + TRM Labs | AML blockchain analytics · 200+ feature ML risk scoring on every wallet and transaction |
Pyth Network | High-frequency on-chain price oracles · manipulation-resistant TWAP data for circuit breakers |
Jito Labs | MEV protection · private transaction bundle submission · eliminates sandwich attacks on CEDEX |
Certora | Formal verification of six mathematical invariants pre-mainnet (no unauthorized minting, 1:1 backing, etc.) |
7. Roadmap — From Beta to Global Infrastructure
Beta Validation Complete — 3 issuers · $7M+ in liquidity processed · Mainnet launch targeting Q3 2026 UPDATED V8
Phase | Timeline | Key Milestones |
Phase 1 — Launch | Q3 2026 | Mainnet · CEDEX live · First 10 ST22 Digital Securities listings · OTCM STO ($20M Reg D/S) · Empire onboarding live UPDATED V8 |
Phase 2 — Growth | Q4 2026–Q1 2027 | 100+ issuer listings · UK/EU/UAE expansion · NASDAQ listing (GROO) strategy · CEX listings for OTCM Security Token UPDATED V8 |
Phase 3 — Expansion | 2027–2028 | Reg A+ retail pathway · 1,000+ issuer target · Wormhole cross-chain bridge · Reg S global rollout UPDATED V8 |
Phase 4 — Scale | 2028+ | Global Perpetual Market Infrastructure · EVM compatibility layer · every illiquid security on earth has a permanent market |
OTCM Security Token (STO)
The OTCM Security Token is a 100% security token backed 1:1 by Series “S” Preferred Shares held at Empire Stock Transfer — not a utility token, not a meme coin.
Parameter | Details |
Total Supply | 1,000,000,000 OTCM tokens |
Token Price | $0.02 per token |
Offering Size | $20,000,000 (Reg D / Reg S) UPDATED V8 |
Minimum Investment | $5,000 USD |
Backing | 1:1 Series “S” Preferred Shares · Empire Stock Transfer custody |
Listing Venues | Traditional centralized exchanges (Binance, Kraken, Coinbase) — NOT DeFi liquidity pools |
Digital Securities Classification | SEC Release No. 33-11412 · Category 1 Model B |
8. Why OTCM Wins — The Competitive Moat
Moat | Why It Is Defensible |
Transfer Hook Architecture | External DEXs (Raydium, Orca, Meteora) disable Transfer Hooks — they literally cannot support ST22 tokens. CEDEX is the only compliant venue. This is architectural, not contractual. |
First-Mover Regulatory Clarity | Release No. 33-11412 and the Category 1 Model B framework are new (2026). OTCM is already built to them. Competitors start from zero. |
Permanent Liquidity Lock | Global Unified CEDEX Liquidity Pool LP tokens are burned at initialization. No party — including OTCM Protocol — can ever withdraw this capital. Mathematical guarantee, not policy. |
EDGAR Data Moat (Layer 9 AI) | Years of EDGAR + OTC Markets data creates a proprietary IDOS scoring model that compounds with every new issuer. Cannot be bought or replicated without equivalent operating history. |
Empire Stock Transfer Integration | Exclusive SEC-registered transfer agent providing legal certainty that self-custody models legally cannot achieve. Patrick Mokros serves dual roles as OTCM COO and Empire President. |
SEC Category 1 Compliance Architecture | OTCM Protocol does not compete with Raydium, Orca, or Uniswap. Those platforms serve fungible commodities. OTCM serves regulated Digital Securities that those platforms legally cannot support. |
9. Get Involved
FOR ISSUERS — List Your Digital Security on OTCM Protocol
If your company’s shares are illiquid, trapped, or trading in the OTC grey or expert market, OTCM Protocol can create a permanent, compliant trading market for your shareholders in days — not months.
• Investment: $1,000–$25,000 USD one-time ST22 minting fee · issuer receives 95% of primary raise proceeds in USD
• Timeline: Onboarding to live trading in 15–21 business days
• Requirements: SEC-registered entity · Empire Stock Transfer as custodian · KYC/AML verification by Empire
• Contact: frank@otcm.io · invest@otcm.io
FOR INVESTORS — Trade ST22 Digital Securities on CEDEX
Access a new asset class: tokenized equity securities in companies that traditional markets abandoned. Trade 24/7 with mathematical protections traditional exchanges cannot provide.
• Eligibility: Accredited investor verification by Empire Stock Transfer required for U.S. participants
• Download the OTCM Wallet (iOS / Android) to get started
• Trade on CEDEX at cedex.otcm.io
Contact & Resources
Channel | Address |
General / Investors | invest@otcm.io |
Issuer Applications | frank@otcm.io |
Corporate Website | otcm.io |
Technical Whitepaper (V8.0) | otcm.io/whitepaper |
OTCM Issuers Gateway | otcm.me |
CEDEX Trading | cedex.otcm.io |
Company Address | 12 Daniel Rd East, Fairfield, NJ 07004 |
SEC EDGAR CIK | 1499275 · Ticker: GROO |
© 2026 Groovy Company, Inc. dba OTCM Protocol. All rights reserved.
Open Source · Public Domain · Free to Distribute · Version 8.0 · Wyoming Corporation · CIK: 1499275
Disclaimer
This document is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. ST22 Digital Securities are offered exclusively to verified accredited investors under SEC Reg D and Release No. 33-11412. Investment in Digital Securities involves significant risk, including possible loss of the entire investment. Groovy Company, Inc. dba OTCM Protocol is a Wyoming Corporation (CIK: 1499275). UPDATED V8