---
title: "Using Splits to escrow an OTC deal"
date: "2026-06-18"
canonical: "https://splits.org/blog/using-splits-to-escrow-an-otc-deal/"
---

# Using Splits to escrow an OTC deal

Splits offers a neutral, onchain escrow for over-the-counter (OTC) deals.

One account holds the Buyer's funds, the Seller's asset, and a collateral bond (if necessary), then releases everything atomically in a single transaction.

A neutral third party (the "Arbiter") holds a tie-breaking key for dispute resolution, no custody required.

This guide covers the Splits mechanics only. Asset, quantity, price, collateral, and delivery timelines are negotiated offchain between Buyer and Seller.

> Setting up an OTC escrow on Splits? Reach out to [**support@splits.org**](mailto:support@splits.org), we're happy to help you get the account configured correctly so your first deal goes smoothly.

## How it works

You create one team with a single escrow account, controlled by a 2-of-3 signer set: a Buyer representative, a Seller representative, and an Arbiter representative. Because every transfer needs two of the three signatures, no party has custody or can move assets unilaterally.

Settlement is two (sometimes three) deposits and one release:

-   Optional: Seller posts collateral (USDC) as a good-faith bond.
-   Buyer deposits the full purchase amount (USDC).
-   Seller delivers the asset (Token A) when ready.

Once all three are in the account, you assemble a single batch transaction that sends the asset to the Buyer, the purchase amount to the Seller, and the collateral back to the Seller. The Buyer and Seller co-sign, and everything moves together, or nothing moves.

## Before you start

Agree on the three signers:

-   A representative from the Buyer
-   A representative from the Seller
-   A neutral third party trusted by both sides to be the Arbiter, in case the Buyer or Seller tries to reneg later.

Have each signer's email ready, along with the finalized terms: asset, quantity, price, collateral amount, and delivery deadline.

## Set up the escrow

1.  Create a new team in Splits.
2.  Add the Buyer rep, Seller rep, and Arbiter rep as signers using their email addresses.
3.  Set the team's recovery threshold to 2-of-3.

Set the escrow account (the Treasury) to a 2-of-3 threshold as well, so any transfer requires two of the three signatures.

![](https://storage.ghost.io/c/ec/10/ec1004a4-54fe-4879-9efd-9a3fe755a821/content/images/2026/06/otc-4.png)

## Fund the escrow

Send the assets into the escrow account.

1.  **If necessary, Seller posts collateral.** Seller deposits the agreed collateral. Once in, it can't be withdrawn without two of the three signatures.
2.  **Buyer deposits the purchase amount.** With terms and collateral locked, Buyer deposits the full purchase amount into the same account.
3.  **Seller delivers the asset.** When ready to fulfill, Seller transfers the asset (Token A) into the account.

The account now holds everything: Buyer's purchasing amount, Seller's asset, and Seller's collateral.

![](https://storage.ghost.io/c/ec/10/ec1004a4-54fe-4879-9efd-9a3fe755a821/content/images/2026/06/otc-7.png)

## Settle the deal

With all assets in the account, build settlement as [one batch transaction](https://splits.notion.site/batch-transactions):

1.  Click “Send” to initiate a transfer the asset (Token A) to Buyer's chosen address and click _Add to batch_.
2.  Click “Send” to initiate a transfer of the full purchase amount to Seller’s chosen address. Click _Add to batch_.
3.  Click “Send” to initiate a transfer returning the collateral to Seller. Click _Add to batch_.
4.  Buyer and Seller each sign the batch (2 of 3).

The transfers execute together and the deal settles. In the happy path, the third party never has to sign.

![](https://storage.ghost.io/c/ec/10/ec1004a4-54fe-4879-9efd-9a3fe755a821/content/images/2026/06/otc-3.png)

## If a party reneges

The third party Arbiter is the tiebreaker for the failure case.

If one side fails to deliver — Seller never sends the asset, or Buyer never funds — the other party contacts the Arbiter. Together they sign a 2-of-3 transaction that unwinds the deal according to the appropriate terms.

If Buyer reneges after Seller has posted collateral, the collateral is return to Seller.

If Seller reneges: Buyer's funds are returned, and Seller's collateral is released to Buyer as compensation for the broken commitment.

![](https://storage.ghost.io/c/ec/10/ec1004a4-54fe-4879-9efd-9a3fe755a821/content/images/2026/06/otc-9.png)

Because no single party can unilaterally access funds, neither side can drain the escrow or hold the assets hostage.

The worst case is a standoff the Arbiter resolves, but clearly defined terms and the neutral third party as Arbiter should make this very rare.

## Notes

_Splits provides the tooling and infrastructure. It does not arbitrate disputes, custody keys, or enforce offchain agreements - that's the job of the signers and the neutral third party._

_Settle only after confirming the deposited amounts as well as every destination address in the batch. Onchain transfers are irreversible._