Summary

Peer-to-peer (C2C) trading is increasingly popular among cryptocurrency traders, but as with any type of trading, there are potential risks with C2C trading. Understanding these risks can help traders avoid potential losses and better understand the trading process. Read on to learn what precautions traders can take, as well as the methods and situations in which they should be applied.

Introduction

Peer-to-peer (C2C) cryptocurrency trading refers to the Buy and sell digital currencies with the involvement of third-party intermediaries. C2C transactions support buyers and sellers in setting prices, selecting trading partners, and deciding on appropriate transaction times. In C2C trading, diligent and experienced traders can find and exploit favorable trading conditions to meet their needs.

Cryptocurrency C2C markets facilitate direct transactions of cryptocurrencies between individual users. Since there is no central authority or third-party intermediary, users have greater control over their funds and their identity is protected during transactions.

Despite these benefits of C2C transactions, there are also some risks. Users should clearly understand the risks before attempting C2C transactions. Common risks traders face include false proof of payment, chargeback fraud, incorrect transfers, man-in-the-middle attacks, triangle scams, and phishing.

Are C2C transactions safe?

As with any type of transaction, C2C transactions also have certain risks, which vary depending on the trading platform and its security measures . While early trading platforms faced higher risks of theft and fraud, many newer C2C trading platforms have greatly improved their security measures.

Today, leading C2C trading platforms often provide custodial services, implement regular security updates and strict identity verification processes (among other measures) to ensure user safety.

However, even with appropriate protection measures in place, all trading activities carry risks, and C2C transactions are no exception.

What are the common C2C scams?

False proof of payment or text message

Scammers may trick you into releasing cryptocurrency by digitally altering receipts to make you think they have paid. One example is a text message scam, where criminals send victims fake payment receipt text messages.

How to avoid this type of scam:Sellers should only verify that payment has been received in their wallet or bank account , the transaction should be approved.

Refund Fraud

Crooks may use the refund function of your chosen payment platform to reverse the payment after receiving your assets. In many cases, they will attempt to pay through a third-party account. Some payment methods, such as checks and online wallets, make it easier to request a refund.

How to avoid this scam: Do not accept payments from third-party accounts. If this happens, an appeal should be filed with the platform and the money will be refunded to the buyer's account.

Error transfer

As with chargeback fraud, scammers may steal your assets by reporting the erroneous transaction to their bank and requesting that the transaction be reversed. Some scammers even use scare tactics, such as warning you that selling cryptocurrencies is illegal, to discourage victims from reporting the incident.

How to avoid this type of scam:Don’t be intimidated by scare tactics. Systematically collect records of communications and transactions with criminals, such as screenshots.

Man-in-the-middle attack

In the man-in-the-middle attack , criminals will intervene in the user's communication with the application, organization or another person, pretending to be another party to communicate with the user, in order to steal assets or sensitive information (such as private keys). The three main categories of man-in-the-middle attacks include dating scams, investment scams, and e-commerce scams.

1. Marriage fraud. In romance scams, scammers pretend to be dating their victims online. After gaining the victim's trust, they manipulate the victim into helping solve their financial problems, wire money or cryptocurrency, or share sensitive information such as private keys. Once they have achieved their purpose, all contact will be terminated.

2. Investment fraud. In investment scams, criminals approach and convince victims to invest in a business. As the "middleman" between victims and investment opportunities, scammers can allocate users' funds at will under the guise of "investment."

3. E-commerce fraud. In e-commerce scams, scammers pose as online sellers selling high-quality goods at discounted prices. They insist that victims pay cryptocurrencies to their wallets. After the victim pays, they disappear without delivering the promised goods.

How to avoid this scam:Do not respond to any social media Transaction requests on the online platform. Before and during the transaction, both parties communicate only on the official platform.

Triangle scam

In a triangle scam, two criminals place two orders from the same seller at almost the same time to confuse the seller into releasing more cryptocurrency than was actually paid.

For example, buyer A took a cryptocurrency order (order A) worth 5000 BUSD, and buyer B took a Placed an order equivalent to 6000 BUSD (Order B).

Subsequently, buyer B transfers 5000 BUSD to the seller, and buyer A marks order A as paid. The seller releases the cryptocurrency to buyer A, thereby completing order A of 5,000 BUSD. Buyer B then transfers 1,000 BUSD to the seller and provides proof of payment of 5,000 BUSD (obtained from buyer A) plus 1,000 BUSD, forcing the seller to release the digital assets under order B.

After the dust settled, it turned out that the seller released 5000+6000=11000 BUSD worth of cryptocurrency, but actually only received The amount of 6000 BUSD arrived.

How to avoid this scam: Always double-check your bank account or wallet to confirm you actually received it All amounts due under pending C2C transactions.

Phishing

Phishing is a malicious attack. In phishing, scammers use false profiles to trick users into sending assets or information. For example, criminals may impersonate customer service representatives of C2C platforms to gain access to private information or encrypted accounts.

How to avoid this scam: Scammers may send account-related information via email or text message False security alert. When viewing information, do not click on unknown links before verifying the source. You should only seek help through official C2C trading platforms.

How to identify risks

Before trading

1. View C2C advertising information. Vet any potential counterparty before entering into a transaction with it. Some things you need to pay attention to when viewing C2C information are:

   • Transaction volume: C2C counterparties with few transactions may not necessarily have problems, but high transaction volume may indicate that the counterparty is more reliable.

   • Order completion rate: If the other party's order completion rate is less than 80%, please reconsider whether to proceed with the transaction, as this may indicate that the trader often withdraws transactions.

   • Advertiser or user feedback: Few positive reviews or a large number of negative reviews may indicate a higher transaction risk.

2. Look at the ad carefully. Each C2C ad is evaluated to determine if it meets your needs and goals. Consider price, quantity, accepted payment methods, restrictions (such as transaction amounts) and other terms and conditions. For example, if the C2C price is too different from the market price on other trading platforms, then the advertisement is more suspicious.

When trading

1. Be vigilant when communicating with C2C buyers. Some red flags include:

   • Buyers are pushing you to release the cryptocurrency.

   • Buyers request non-essential information.

   • The buyer can no longer be contacted.

   • The buyer borrows money from you.

   • The buyer paid less than the amount agreed in the order.

   • The buyer paid more than the amount agreed in the order.

   • Buyers require communication outside the C2C platform.

   • The buyer requires payment through a third party.

2. Be vigilant when communicating with C2C sellers. Some red flags include:

   • After you pay, the seller asks you to cancel the order.

   • The seller requires communication outside the C2C platform.

   • The seller requires transactions outside the C2C platform.

   • The seller requires you to pay additional handling fees.

After transaction

Red flags when communicating with C2C buyers include:

• You did not receive the corresponding assets after payment.

• The buyer is paying a bad check.

• After receiving payment from the buyer, your bank account is disabled.

• The buyer initiates a refund request through their bank after you send the cryptocurrency.

Common ways to prevent scams

Trade on a trusted platform

Choose a leading C2C platform with strong security features. Common features include:

1. Risk management features. If platforms enforce specific requirements before transactions are made, it will help reduce ineffective, unreliable or low-quality ads. Even better, the platform uses advanced order matching logic to match users only with trusted traders and verified advertisers, and uses risk management algorithms to monitor suspicious activity.

   Some optimized algorithms can even limit the trading activities of potential criminals. Additionally, withdrawal limits or delayed withdrawals help protect user funds.

2. Know Your Customer (KYC) Agreement. If the C2C platform has a KYC protocol, it can help beginners find reliable trading partners through user identity verification. This allows beginners to trade with verified advertisers with proven transaction records and funding sources.

3. Custody Services. Cescrow services allow buyers and sellers to securely exchange goods or assets. A reputable third-party institution (usually a C2C platform) is responsible for handling the exchange of funds between the two parties to ensure the safety and fairness of the transaction.

4. Customer service. Although C2C transactions usually do not require middlemen, the customer service team of the C2C platform can intervene when users encounter transaction problems.

5. Automatic payments. Through the new automatic payment method, C2C platforms can automatically release cryptocurrencies in custody accounts without manual intervention. Buyers receive their newly purchased assets immediately, and sellers don’t need to manually check payments for each order or release assets manually.

6. Block function. You can block suspicious users through the block function. If you have had an unpleasant trading experience with a user, you can block that user. After being blocked, the user will not be able to trade with you again.

Communication only through the platform

Avoid contacting potential counterparties on suspicious websites, and be wary of overly attractive prices. In addition, if communication is through external channels, it is easier for scammers to raise false disputes and deny the existence of the transaction.

Check the transaction

Be sure to carefully verify all counterparty information when trading. Carefully check all receipts and transaction records to ensure information has not been tampered with through digital means. Here are some tips for spotting fake proof of payment:

• Text overlap

• Inconsistent colors

• Inconsistent layout

• Inconsistent sizes

You can also use free image forensic tools online. Search for "fake image detector" or "image forensics tool" for related information.

Take screenshot

Keep records of all correspondence and transactions in case an appeal needs to be lodged.

Publish targeted advertising

If you have established a cryptocurrency network, make sure your ads are only targeted to the people you want to trade with. Hide your ads and only share them with specific people, such as people you know and trust, or users with whom you have successfully transacted before. Hiding ads is also very helpful if you want to make large deals.

Block suspicious people

Actively block Hack users who have had bad transactions with you to prevent fraud and other behaviors that affect your trading experience.

File a complaint

If you encounter a problem, please contact customer service and file a complaint. Please provide all transaction-related evidence so that customer service can better assist you.



Conclusion

In order to protect your assets, it is important to remain alert to the potential risks associated with C2C transactions. This includes understanding the terms and conditions of any agreement, staying alert to red flags, and using a platform with strong security features.

Be vigilant when participating in any C2C transactions and contact customer service if you have any concerns. By staying alert and taking the necessary precautions, you can fully enjoy the benefits of C2C transactions.

Extended reading

• What is peer-to-peer trading? and how to use?

• Detailed explanation of peer-to-peer networks | Binance Academy

• Why and how to do your own research (DYOR) when investing in cryptocurrencies Do your research

• Five risk management strategies


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