Beware Of P2P Crypto Scams: Tips For Secure Transactions

By Stephen Carter


Reviewed by: Stephen Carter


P2P Crypto Scams

Crypto trading is different from trading other fiat currencies due to the Peer-to-Peer (P2P) nature of the transactions.

P2P trading refers to direct trading between the buyer and the seller (the two peers) without the interference of a third-party authority such as a bank or an exchange.

The P2P trading platform serves only as a platform to facilitate the trade and does not interfere in its workings.

Before we discuss more about the potential scams in P2P transactions, understand how P2P trading works to get a deeper understanding of the possible pathways of the scam.

How does P2P Trading Work?

The different steps to be followed for the successful completion of trade on a P2P platform are given below.

  1. The first step is to register yourself on a P2P platform by creating your account on it. You may need to provide your details for KYC verification.

  2. Next, make a list of the cryptocurrencies that you intend to trade and decide on the amount of crypto you wish to buy or sell.

  3. The platform automatically matches your choice with any other counterparty whose interest matches your choice.

  4. To ensure the security of the transactions, the platform asks both parties to deposit the assets that they wish to trade into an escrow account.

    This step ensures that neither of the parties do not run away without completing the transactions.

  5. The P2P platform also provides a space for inter-party communication for the parties involved to discuss the terms and conditions.

  6. After the negotiation, both the parties confirm their agreement to the terms and conditions.

  7. After the confirmation and agreement, the escrow will release the assets and exchange them between the concerned parties.

Online money transaction is an area where many scams happen every day. The right knowledge about the scams and the way they are executed is essential while thinking about ways to avoid them.

P2P Crypto Scams

In this section, we will talk about different P2P crypto scams and ways to avoid them.

Fake Escrow Transaction Receipts

Escrow transactions are essential in the P2P network. The fraudsters can approach you with a fake receipt or other details showing a fake escrow transaction.

They may ask you to release your payments or assets in return for the fake transaction. Always remember that escrow transactions are done simultaneously from both sides and the payment transaction will directly reflect on your account.

You should move away from suspicious transactions and confirm with your bank or wallet to ensure the authenticity of the transactions.

Triangle Scams

Triangle scams occur when two scammers place simultaneous orders to buy the same set of assets.

One scammer may ask the seller to release the assets by showing the payment reference of the payment made by the other scammer.

This may result in the seller receiving less than the required sum. To avoid such scams, always ensure that you check the name and other details on the payment receipt to ensure that you are doing business with the right person.

Man-in-the-Middle Scams

In these types of scams, the scammer may pretend to be the P2P platform and will offer to give you advice.

They might contact you through other social media channels such as Telegram, WhatsApp, Facebook, etc, and might coax you to use the links given by them for conducting transactions.

In order to avoid such instances, make sure that you make communications only through authorized channels. Do not accept payments or transfer your assets through any third-party apps or websites.

SMS Scams

Fraudsters may send you SMS by posing as banks or crypto wallets and may ask you to make payments or provide other sensitive details.

You should not make any communications through any other means other than the chat facility of the P2P platform and check with the concerned authority before making the transactions.

Also, Read: The Rise Of Crypto Scams: How To Spot And Avoid Them?

The Bottom Line

P2P crypto trading is an easy and convenient method of trading when compared to other traditional methods.

But it is not devoid of scams. So, you should make it a habit to ensure the validity of the transactions before confirmation to save your valuable assets from P2P crypto scams.

Stephen Carter

Stephen Carter is a software technology expert. He writes about market research on various hot topics like cryptocurrencies, explaining how they started. He's good at making complicated tech ideas easy to understand for everyone.

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