Hey Crypto 101 Squad,
I know it has been a long time since I last posted, but now I am back on track, so you will see me every Sunday (just like the old times).
Today’s topic of discussion is a bit concerning; most of us use P2P transactions to buy or sell our crypto, but lately, there have been a lot of fraudulent activities.
The fraudsters and scammers use the P2P marketplace to carry out their illegal operations.
And if you unintentionally or accidentally enter a transaction with them, the cyber police will freeze your bank account.
Am I saying stop P2P and leave crypto? No!
I will tell you exactly how this whole thing works, how people are getting scammed and how you can prevent this from happening with you by keeping a few things in mind while doing your next P2P transaction.
I will keep the INDIAN markets as the center of attention. Still, this phenomenon is happening globally, so it’ll be helpful to you, too, even if you are situated out of India.
Keep reading because, as you know, I never disappoint or bait my audience.
Let’s dive in:
Usually, how a Peer-To-Peer (P2P) transaction looks like?
There’s a buyer and a seller.
Now, if you want to sell your crypto, you go on to the marketplace, select a seller, and the seller transfers money into your bank A/C.
After receiving money, you release your crypto, and the transaction ends, right?
In this transaction, you got the money, and the other person got your crypto.
You may ask, so what, Vaibhav? This is how it happens. What’s the big deal?
Here’s the catch,
- You don’t know the other person, do you? No, you don’t?
- You don’t know where they are based?
- You have no clue about him. Is he an ordinary guy or a criminal?
Now here’s how the situation is Behind the Scenes:
Let’s say you wanted to sell USDT worth $600 and selected a seller named PABLO on the P2P marketplace.
PABLO transfers $600 to your account, and you release your crypto after receiving the money.
A day later, you receive a notice from the cyber cell that:
“Your account was involved in illegal activities and hence been frozen with immediate effect for an indefinite time. Please contact your nearest official authorities”.
Sounds scary? It is indeed.
What happened here was that PABLO was a scammer who got that money by cheating people and transferred that money to your Bank A/C.
Now, when the authorities look at your transaction from the outside, it seems like you are also a part of their gang!
And they freeze your account, but in reality, you are just a common person who sold his USDT.
This is really common on Decentralized exchanges like KuCoin.
PABLO is a lottery ticket scammer; he called Maria and told her that she won $100K and to claim the winning amount, she needed to transfer $600 to a bank A/C.
Pablo has access to your bank details through P2P. He impersonates you and gives your bank details to MARIA.
Maria transfers the money to your bank, and after receiving the money, you transfer the $600 USDT to PABLO.
You got the money.
PABLO got the crypto.
What did Maria get?
She got cheated.
She files an online fraud complaint to the cyber cell, and boom!
Your bank A/C is now frozen.
Now you have to prove your innocence;
but the reality is that PABLO scammed you and MARIA.
There have been a lot of such cases recently.
Look at this Twitter thread from a victim whose account was frozen and is still frozen after 2.5 months after this incident.
In other cases, the cyber cell officer told the victim that the scammer stole money from a company, created a bank account and a Binance account, traded with the victim, and sent the money to the victim’s bank account and the victim’s account was frozen.
This is one way of getting in trouble.
Here’s the second one:
Let’s keep the same example of you and PABLO.
Now in the above example, PABLO was a scammer. Once the transaction ends and you release the USDT.
PABLO goes to the cyber cell and files a complaint that you cheated him.
You heard it right! A fraud is telling the police that you are a fraud.
And you have to prove your innocence.
READ THIS TWITTER THREAD TO KNOW IN-DEPTH ABOUT THESE SCAMS
What are the ways to avoid these situations?
Binance posted an update addressing the same concern because many Binance p2p users accounts are frozen.
- Try to avoid doing P2P on decentralized exchanges, even avoid Indian exchanges like WazirX because, in their P2P marketplace, you can’t find a single detail about the other person.
- Use centralized exchanges like Binance and Coinbase to carry out P2P transactions and check the other party’s details.
- Always trade with a verified merchant on Binance who has a tick in front of their name.
- If you can’t find verified merchants, go to the P2P marketplace> Select “Filters”> Enable “Only show ads from merchant.”
- If you can’t find verified merchants, go to the P2P marketplace> Select “Filters”> Enable “Only show ads from merchant.”
- Don’t trade with profiles who have less number of trades (ideally, they should have been into 1000+ trades)
- The completion rate of the merchant should be above 98% (with over 1,000 tradesF
- It is better if you create a separate bank A/c for P2P transactions because this is something no one knows. Even after taking precautionary measures, you can face trouble.
Here’s Binance’s advice to their P2P users.
- Don’t use your main A/C from P2P and try to have very few funds in your bank, so in case your accounts get a freeze, you don’t land up in big trouble.
What if my account is frozen?
Not everyone can avoid this situation, so if your account gets frozen,
- You should contact the nearest cyber police dept. ASAP.
- Contact with your bank’s branch.
- Get in touch with a lawyer.
This is the experience of a user whose account got blocked and he’s still struggling to lift the freeze. Read the complete thread here.
CONCLUSION
P2P is undoubtedly a great mechanism if you want to bypass the hefty bank transaction fee and time, but simultaneously, the online world is not 100% secure; you need to be aware and alert.
- Always trade carefully and check every detail.
- Try to use centralized exchanges as much as you can
- if you receive funds from another name/account than the one mentioned in the P2P dashboard, report that transaction and save yourself from trouble.
If you find this useful, do let me know in the comments!
I will see you next Sunday; till then, SUBSCRIBE to the newsletter and stay healthy.
See ya!