Binance, the world’s leading blockchain ecosystem and infrastructure provider, has outlined some recommended safe practices in Peer-to-peer (P2P) trading. In an era characterised by the rapid digitisation of traditional financial systems, the emergence of P2P trading is an exciting development, providing a financing method that facilitates direct interaction between two independent parties.
P2P trading, with its straightforward nature, enables users to conduct direct transactions without relying on any centralised exchange or spot order-matching engine. Sellers can set their preferred prices and payment methods, while buyers can purchase digital assets on their terms from counterparties of their choice. This transacting method has witnessed good visibility due to numerous advantages, such as diverse payment options, zero transaction fees, and the ability to personalise offers.
As the crypto industry continues to mature, P2P trading platforms are poised to play a more significant role in the financial future, offering a highly accessible and cost-effective form of purchase/sale vs. other products offered by crypto exchanges. However, mitigating the volatility of the crypto market and ensuring stability are essential for broader adoption and long-term success.
Identifying the chink in the armour
Scams in P2P trading have become a growing concern as scammers seek to exploit the disintermediation and exploit unsuspecting buyers and sellers. It is essential to acknowledge that financial products come with risks, and P2P is not an exception. The best protection for users of any P2P trading platform is to be aware of the most common scam tactics, so that they can better equip themselves to avoid falling for such scams.
Some common P2P scams include fake customer support scams, fake proof of payment scams, chargeback frauds, and more. Users should be aware of common tactics and follow certain precautions while engaging in P2P trading to protect themselves. In the fake customer support scam, scammers pretend to be customer support representatives of the P2P exchange and trick users into revealing important account details or digital asset wallet credentials. To avoid falling for this, users should always seek assistance from the official P2P exchange’s customer support channels and refrain from clicking on unknown links sent via email or text messages.
Occasionally, scammers create fake proof of payment with manipulated screenshots that deceive users into believing they have completed their part of the deal, pressuring them to do the same. Users should carefully check their bank accounts or crypto wallets to confirm receipt of funds before releasing the assets.
Chargeback fraud is a cause for concern where scammers file chargeback requests upon completion of a P2P transaction, claiming they never authorised the fund transfer. This results in the initial payment being reversed, causing a loss of digital assets and money.
To protect against this fraud, maintain screenshots of transactions as evidence and contact customer support for assistance if needed. Users can protect themselves by taking screenshots of transactions, using the platform’s escrow service, verifying transactions before authorising transfers, and sticking to on-platform communication. Furthermore, users should choose reputable P2P platforms that verify the identity of users through KYC. Most trusted platforms often have an escrow service in place, providing additional protection.
Users should also check reviews and the social media presence of the platform to gauge its reliability and customer support. Most P2P exchanges offer 2FA as an additional security layer. Users must enable it to reduce the risk of unauthorised access even if login details are compromised. Scammers often use fake websites closely mimicking genuine ones. Always double-check the URL of the website and ensure it is the official one before entering any login credentials or sensitive information.
The exchanges come in
P2P exchanges should look beyond serving as merely a connection between buyers and sellers and prioritise robust user protection measures. It includes secure transactions and minimising the risk of fraud through effective feedback and rating systems. Since the launch of Binance P2P in 2019, Binance remains committed to improving user’s trading experience and safety. In 2022, Binance launched the Fund Password feature, a security mechanism that makes transactions on the P2P exchange platform faster and safer. When users enable this function in their account, they can potentially avoid the problem of delayed authentication text messages caused by subpar connectivity or issues with local mobile carriers. This can also facilitate faster release of orders and minimize the chances of users falling prey to phishing SMS messages.
Exchanges can offer features like profit and loss (P&L) statements that provide access to comprehensive overviews of their trades, facilitating evaluation of financial performance and aiding in tax reporting. Engagement with policymakers can also further strengthen user protection. Additionally, it is essential to empower users by promoting awareness and enabling them to recognise and defend against fraudulent activities effectively.
The rise of P2P trading in the crypto industry presents lucrative opportunities for all industry participants. However, vigilance and adherence to security measures are paramount to ensure a safe and reliable trading environment. By staying informed, cautious, and discerning, users can navigate the P2P landscape with confidence and reap the benefits of this innovative financial paradigm.
For more info on how to safeguard yourself from P2P scams, you can refer to these articles on Binance Blog:
- https://www.binance.com/en-IN/blog/p2p/common-p2p-scams-in-developing-countries-and-how-to-avoid-them-1843867707336479681
- https://www.binance.com/en/blog/p2p/how-to-spot-and-avoid-p2p-scams-and-fraud-6416111153825153913
- https://www.binance.com/en/blog/community/know-your-scam-money-transfer-scams-in-crypto-7595157715027028293
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