What are P2P crypto scams, and how to stay safe?

Key takeaways

Fraudsters exploit the flexibility and anonymity of P2P platforms, tricking users with tactics such as fake payments, chargeback fraud, phishing and identity theft.
Warning signs of scams include fake profiles, suspicious payment methods, pressure tactics and unrealistic offers that seem too good to be true.
To stay safe, only use reputable P2P platforms with escrow services, verify users’ trading histories, use secure payment methods and enable two-factor authentication (2FA).
If you’ve been scammed, report the incident to the platform, notify authorities, and secure your assets by changing passwords and transferring your remaining crypto to a secure wallet.

The popularity of peer-to-peer (P2P) crypto trading has surged in recent years, with platforms like Binance P2P attracting millions of users. According to Allied Market Research, the P2P lending market is expected to experience a substantial increase, reaching $558.91 billion by 2027, with a compound annual growth rate of 29.7%.

What is the reason for this exponential growth? Because P2P platforms offer more flexibility, lower costs, and broader access to crypto buyers and sellers.

In the world of cryptocurrencies, P2P networks allow users to trade directly with each other, essentially eliminating the need for third parties. Typically, digital infrastructure, such as an escrow service, is involved in securing and facilitating the transactions.

Using an escrow service boosts safety because it holds the funds until all predefined conditions are met. This setup protects both the buyer and seller, ensuring no one gets their funds until the terms of the deal are satisfied.

P2P platforms also give traders insights into each other’s profiles, including trading history, which helps participants identify reliable advertisers. They even offer a dispute resolution process in case things go wrong. However, even with these precautions, scammers are always lurking, ready to steal someone’s money.

This article dives into what P2P crypto scams are, the common types you might encounter, how to spot them, and what you can do to stay safe. Plus, we’ll cover what steps to take if you do fall victim to a scam.

What are P2P crypto scams?

P2P crypto scams happen when con artists trick or manipulate people into deals that end up costing them money. These scams can take different forms, including chargeback fraud, identity theft or fake payment confirmations.

While P2P platforms offer flexibility and anonymity, this can also create the perfect environment for scammers to thrive. Unlike centralized exchanges, where the exchange sets the rules and monitors transactions as part of compliance, P2P platforms have looser oversight. That means you’re often relying on the honesty and integrity of the person you’re trading with, leaving you vulnerable to fraudsters looking to exploit your trust.

On P2P platforms, scammers often use phishing attacks to get hold of your private keys or login credentials. They might also forge payment confirmations to trick users into sending crypto. Knowing the common strategies scammers use and the warning signs of fraud is crucial if you want to avoid becoming a victim.

Did you know? P2P transactions in the US are expected to increase to nearly $2.3 trillion annually by 2026.

Binance P2P

Common types of P2P crypto scams

Here are some of the most common P2P crypto scams to watch out for:

Fake payments: One popular scam involves a fraudster tricking you into releasing your crypto without them having actually made a payment. They use fake confirmations, manipulated screenshots or bogus receipts to convince you that the transaction is complete, then they disappear once you’ve sent the crypto.
Chargeback scams: In this scam, the con artist makes a genuine payment using a reversible method such as PayPal or a credit card. Once they receive your crypto, they reverse their fiat transaction with the bank or payment provider by claiming it was unauthorized. As a result, you lose both your crypto and the fiat money they sent you.
Phishing scams: Scammers use phishing attacks on P2P platforms to steal your private keys or login credentials. They might pose as a trustworthy source or send fraudulent emails with links to fake websites designed to harvest your sensitive information.
Identity theft: Fraudsters might impersonate well-known, trusted traders. They may attempt to steal your identity by creating fake profiles that seem legitimate, gaining your trust before eventually getting your sensitive information.
Overpayment scams: In an overpayment scam in crypto, the scammer sends you more cryptocurrency than agreed upon for a product or service. They then ask you to refund the excess amount. After you send the refund, the original overpaid transaction is reversed or found to be fraudulent, leaving you without both what you were originally owed and what you sent back.

How to spot crypto P2P fraud

While it can be tough to spot a scam before it happens, there are some red flags you should look out for:

Fake profiles: Avoid profiles with little or no trading history, incomplete information, or poor ratings. Scammers often use stolen identities to create new accounts that seem legitimate at first glance.
Suspicious transactions: If the payment method being used seems unusual or unreliable, it’s worth being cautious. Scammers may offer to pay using hard-to-trace methods like prepaid debit cards or gift cards.
Pressure tactics: Scammers often use pressure tactics to rush you into making a decision. They create a false sense of urgency, saying the deal is about to expire or offering a “once-in-a-lifetime” opportunity. Take your time, and double-check everything before proceeding.
Unrealistic offers: If a deal seems too good to be true, it probably is. Scammers will try to lure you in with offers that sound incredibly advantageous, like high rates or no transaction fees. Be skeptical of these kinds of deals.

How to stay safe in P2P cryptocurrency scams

Here’s how you can protect yourself from P2P crypto scams:

Only use reputable P2P platforms: Stick to P2P networks with strong security measures and solid reputations. Platforms like Binance P2P and Paxful offer escrow services and dispute resolution to protect you during transactions.
Check user profiles: Before starting any transaction, take a look at the other party’s profile. Check their track record, completion percentage and reputation. If the profile looks suspicious or incomplete, steer clear.
Secure payment methods: Make sure the other party is using a safe, verified payment method. Irreversible options like gift cards or prepaid cards should only be used if you 100% trust the other party. Always use the platform’s escrow services to ensure both sides fulfill their obligations.
Never disclose personal information: Don’t share your private keys or login credentials with anyone. Scammers might use phishing tactics or pretend to be customer support to trick you into revealing this information.
Enable two-factor authentication (2FA): Adding 2FA provides an extra layer of security. Even if a scammer gets your login info, they won’t be able to access your account without the second verification step.
Stay skeptical: Always approach deals cautiously, especially if they seem too good to be true. Make sure to research who you’re dealing with before committing to any transaction.

Did you know? In 2022, $3.7 billion was stolen in crypto theft. In 2023, the total amount of crypto stolen fell to $1.7 billion, although the number of individual hacking incidents rose.

What to do if you’ve been scammed

If you’ve been the victim of a P2P crypto scam, act quickly to minimize the damage:

Report the scam: Contact the P2P platform’s support team right away. Many established platforms have systems in place to investigate fraud and might be able to help you recover your funds or shut down the scammer’s account.
Notify the authorities: Depending on the nature of the scam, you may also want to report it to the police, financial crimes agencies, or other local authorities. This is especially important in cases involving large sums of money or identity theft.
Secure your assets: If any of your accounts have been compromised, take steps to secure them immediately. Change your passwords, enable 2FA, and transfer any remaining crypto to a secure wallet.

Navigating the risks

While P2P cryptocurrency transactions can be convenient, they come with risks — especially from scammers looking to exploit unsuspecting traders.

By being cautious, using trusted platforms, and following best practices for online security, you can greatly reduce the chances of falling victim to a scam.

No matter what platform you use, always double-check who you’re trading with, make payments through secure channels, and protect your personal information. Lastly, if an offer seems too good to be true, it probably is. Thus, proceed with caution to safely navigate the P2P crypto landscape.