Ripped off through P2P Crypto Scams? Learn more here

We are increasingly becoming dependent on technology; in fact, we can even manage our online investments and trading on the tip of our fingers. However, scammers are getting smarter and using the same technology to rip us to such an extent that the crypto market is also not immune to these attacks.

The crypto market is the latest asset class, with many traditional investors trying their luck to make substantial amounts of money. A highly volatile and liquid market, in recent years, has seen a huge surge in the rate of adoption. It also offers highly unrealistic profits compared to traditional financial markets.

Scammers exploit their victims through P2P crypto scams, which have seen an exponential surge in recent years.

Understanding P2P Crypto Scams

Although decentralized transactions are allowed in the cryptocurrency market, their immutability presents a major reversibility difficulty.

Since it is difficult to undo a cryptocurrency transaction, caution must be exercised before transferring cryptocurrency to a different wallet.

How do P2P Crypto Scams Operate?

A new trend that has been increasingly on the rise for P2P or peer-to-peer cryptocurrency scams. Such cryptocurrency lost or taken by scammers can prove to be elusive as cryptocurrency networks work in decentralized systems. Although P2P trading provides much flexibility and low cost to consumers, it gives the crooks some new ways of exploiting security holes and cheating gullible users.

P2P Scams: How Do They Work?

Of course, the P2P scam does exploit the direct nature of P2P transactions. In this scenario, two parties should exchange goods or services for fiat money or some other cryptocurrency without a third party.

Common P2P Trading Scams to Avoid

One of the best ways to avoid falling victim to a P2P crypto scam is to be aware of it and avoid it when such scams present themselves in front of you.

Fake P2P Exchanges

Scammers are known to develop bogus P2P crypto exchanges, websites, or platforms to mimic legitimate exchanges. As these exchanges, websites, and trading platforms are so identical to the real thing that many are misled and end up becoming victims of such fraudulent activities.

These charlatans have one more trick up their sleeves; they offer highly exaggerated liquidity, low fees, or even attractive incentives in the hope tend uptims can innocently bring their dear ones to these bogus investment opportunities.

Once these victims invest in the scam, they are given returns on their investments, convincing them that this is a good business opportunity. Motivated, they end up investing more and more. However, when they try to withdraw money from their account, the funds are either frozen or stolen outright, and the platform disappears. Users have no recourse because these platforms are decentralized and often unregulated.

Identity Theft & Phishing

Scammers frequently impersonate legitimate buyers or sellers by stealing their identities. These con artists will hack into popular trading platforms or create bogus profiles. They gain the trust and confidence of their potential victims and engage in fraudulent transactions.

Scammers, especially, launch phishing campaigns against users to steal their sensitive data like private keys, passwords, or recovery phrases. After stealing the stolen information, they steal those cryptocurrencies from the wallet of the victim.

Chargeback Fraud

These are another very common online P2P cryptocurrency scam. Such scams thrive when fiat currencies are exchanged for cryptocurrencies. The impostors will pretend to be buyers and make the fiat money pass through a payment gateway, such as PayPal or bank transfer, in order for them to receive cryptocurrencies from sellers.

These fraudsters will then reverse the payment that they made through their banks or payment gateways, claiming that it was an unauthorized transaction. So the seller loses out both in the cryptocurrencies and the fiat money.

False Escrow Services

Some P2P platforms will use escrow services, which will hold funds pending both parties’ confirmation of completing the trade. Scammers often design fake escrow sites or services to entice users to send their money, thinking their money is being locked away in a safe escrow. The scammers never return the cryptocurrency or the funds held to the user.

Overpayment Scams

In an overpayment scam, the scammer agrees to buy cryptocurrency at an overcharged price. The scammer “accidentally” pays more than the amount due to the seller and asks for it to be refunded in fiat. The scammer will make the payment using stolen funds or a fraudulent method of payment, and once the seller agrees to refund the difference, the original payment will be reversed and the seller left holding the bag.

Fake Payment Confirmations

In some P2P crypto transactions, fraudsters provide fake screenshots or confirmations of payment to deceive the seller into letting go of the cryptocurrency. Since the victim believes payment has been made, he/she sends the cryptocurrency to the scammer, and by the time the victim finds out it was not a successful transaction, it becomes too late to reverse the crypto transfer.

Advanced Fee Fraud

Scammers promise users large sums of cryptocurrency or exclusive opportunities to buy crypto at a discount if they provide a small “advance fee.” Thinking that it is a great opportunity to make a good amount of money, they will pay these charlatans with the said amount. Once they send the fee, these fraudsters will vanish without delivering the promised cryptocurrency or service. Although this is an age-old traditional “advance fee” scam but adapted for the crypto space.

Rug Pull Scams in P2P Token Trading

Every day a new cryptocurrency comes into existence. They are hyped based on how they would revolutionize the currency crypto market, with the hope of attracting attention and increasing the adoption rate. Regardless, blockchain technology is expensive, and crowdfunding is quite common in the crypto industry. However, many are fake, and those who invest lose thousands of dollars on these worthless coins.

Scammers will convince their audience that it will be the next Bitcoin, the reigning coin in the entire crypto market. They create bogus crypto and go for crowdfunding. Once a large enough amount of money is invested, the creators withdraw all the liquidity from the token’s market, leaving investors with worthless tokens. This can happen quickly and leave victims with no way to recover their funds.

Fake Wallet Apps

Scammers also use fake wallet apps that appear to be legitimate cryptocurrency wallets. These wallets may appear in app stores or be promoted via phishing emails. Once crypto users install these apps and deposit their funds, the scammer can easily drain their accounts. In such peer-to-peer scams, scammers encourage their potential victims to use bogus apps as part of the transaction process, gaining trust before the theft occurs.

Impersonating Customer Support

On P2P platforms, scammers may impersonate customer support representatives to deceive users. They fool their potential victims by sending a message claiming that there was an issue with their transaction or wallet. Charlatans will start to ask for personal details like private keys, passwords, or access to accounts. Thinking that they are dealing with official support may provide this information, resulting in their funds being stolen.

“Pump and Dump” Schemes

Promoting cryptos through text, messaging, and social media platforms is quite common in the crypto industry. Such P2P frauds, initiated by those with token-based ecosystems, can fall prey to pump-and-dump schemes. Scammers will buy some cryptos at a lower price before promoting them. Once they have sufficiently bought these cryptos, they start to promote them. Thus, their price artificially inflates by creating hype and encouraging people to buy in. The scammers then earn their money by selling their holdings when the price is up. In this case, it crashes and leaves most investors with huge losses.

Instances where crypto exchanges fell prey to P2P crypto scams

Several crypto exchanges offer P2P transaction services. Thus, in recent years, social media platforms have been flooded with Binance P2P scams and Bybit P2P scams online. There are also other crypto platforms that have also been frequent targets of cyber attacks.

Thus, as a crypto user, you should be aware of such threats to avoid falling victim to such peer-to-peer scams.

Avoid falling victim to P2P Crypto Scams

There are ways to avoid falling victim to online scams; all you need to do is remember the steps that we have laid out for you down below:

Use Reputable Platforms

Stick to well-known P2P exchanges with positive reviews and a proven track record. For this, you need to go online and do some research. For this, you can also join various crypto communities.

Escrow Services

Do decent research on the crypto exchanges that provide credible escrow services to safeguard your funds until both parties confirm the transaction. Choose those that do not exaggerate unrealistic returns on investments. Scammers tend to impersonate well-known crypto exchanges to lure their unsuspected victims towards them.

Check Buyers/Sellers Identity

Confirm the identity of your customer or seller by cross-checking their information on different sites. Read reviews that were suggested or provided to you by real users, not robots, as these will help you distinguish between the real and the unreal. Frequently, fake businesses use robots to create fake reviews for you to engage with them.

Scammers offer unrealistic business opportunities, promising high gains on investments. Most of the time they offer deals like overpayment offers or pressure to complete a transaction quickly; these are the common red flags.

Protect Personal Information

A genuine crypto exchange, platform, broker, and brokerage firm will avoid asking for your account details, such as private keys, passwords, and other sensitive or personal information. You can be sure that you are dealing with a scammer if someone begins probing you with these sensitive details regarding you.

Final Thoughts

P2P crypto scams are highly sophisticated and will end up crippling your finances if you fall for them. Thus, you should tread carefully with P2P crypto trade, verifying the credibility of the system and the people behind it and using secure means to transfer funds. Staying updated with the latest crypto scams and scrutinizing any business opportunity will keep you from falling victim to such P2P crypto scams.

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