How to securely conduct peer-to-peer (C2C) transactions

Summary

Peer-to-peer(C2C) trading is becoming increasingly popular among cryptocurrency traders, but like any type of trading, C2C transactions also carry potential risks. Understanding these risks helps traders avoid potential losses and better comprehend the trading process. Continue reading to learn about preventive measures traders can take, as well as how and when to apply them.

Introduction

Peer-to-peer(C2C) cryptocurrency trading refers to buying and selling digital currencies without the involvement of third-party intermediaries. C2C trading allows buyers and sellers to set prices, choose trading partners, and decide on suitable trading times. Diligent and experienced traders can seek out and exploit favorable trading conditions to meet their needs.

The cryptocurrency C2C market facilitates direct transactions between individual users. Since there is no central authority or third-party intermediary, users can better control their funds and protect their identities during transactions.

Despite these advantages, C2C trading also involves certain risks. Users should be aware of these risks before attempting C2C transactions. Common risks faced by traders include false payment proofs, refund fraud, incorrect transfers, man-in-the-middle attacks, triangular scams, and phishing.

Is C2C trading safe?

Like any type of trading, C2C transactions carry certain risks, which vary depending on the trading platform and its security measures. While early trading platforms faced higher risks of theft and scams, many newer C2C platforms have significantly improved their security protocols.

Today, leading C2C trading platforms typically offer escrow services, implement regular security updates, enforce strict identity verification processes( and other measures) to ensure user safety.

However, even with appropriate protections, all trading activities carry risks, and C2C trading is no exception.

What are common C2C scams? Fake payment proofs or messages

Scammers may manipulate receipts digitally to make it appear as if they have already paid, tricking you into releasing the cryptocurrency. One example is a message scam, where criminals send forged payment confirmation messages to victims.

How to avoid such scams: Sellers should only approve transactions after verifying that the wallet or bank account has received the payment.

Refund fraud

Malicious actors may use the refund feature of the chosen payment platform to revoke payments after receiving your assets. In many cases, they attempt to pay via third-party accounts. Some payment methods (like checks and online wallets) are more susceptible to refund requests.

How to avoid such scams: Do not accept payments from third-party accounts. If this occurs, file a complaint with the platform and have the funds returned to the buyer’s account.

Incorrect transfer

Similar to refund fraud, scammers may report erroneous transactions to their bank and request to reverse the transaction to steal your assets. Some scammers even use intimidation tactics, such as warning you that selling cryptocurrency is illegal, to prevent victims from reporting the incident.

How to avoid such scams: Do not be intimidated. Systematically collect communication and transaction records with the criminal, such as screenshots.

Man-in-the-middle attack

In a man-in-the-middle attack, malicious actors intervene in communications between users and applications, organizations, or other individuals, impersonating one party to communicate with the user and steal assets or sensitive information (like private keys). The three main categories of man-in-the-middle attacks include romance scams, investment scams, and e-commerce scams.

Romance scams: Scammers pretend to be romantically involved with victims online. After gaining their trust, they manipulate victims into helping solve their financial problems, transferring funds, sending cryptocurrencies, or sharing private keys. Once their goals are achieved, they cut off all contact.

Investment scams: Criminals approach and persuade victims to invest in a certain enterprise. Acting as an intermediary between the victim and the investment opportunity, scammers can manipulate the victim’s funds under the guise of “investment.”

E-commerce scams: Scammers pose as online sellers offering quality goods at discounted prices. They insist that victims pay in cryptocurrency to their wallets. After payment, they disappear without delivering the promised goods.

How to avoid such scams: Do not respond to transaction requests on social media platforms. Communicate only on official platforms before and during transactions.

Triangular scam

In a triangular scam, two criminals almost simultaneously place two orders from the same seller, confusing the seller into releasing more cryptocurrency than the actual payment.

For example, Buyer A places an order for 5000 BUSD worth of cryptocurrency (Order A), while Buyer B places an order equivalent to 6000 BUSD (Order B).

Subsequently, Buyer B transfers 5000 BUSD to the seller, while Buyer A marks Order A as paid. The seller releases the cryptocurrency to Buyer A, completing Order A for 5000 BUSD. Buyer B then transfers 1000 BUSD to the seller and provides proof of payment for 5000 BUSD (obtained from Buyer A) plus 1000 BUSD, forcing the seller to release assets under Order B.

After the dust settles, it turns out the seller released cryptocurrency worth 5000+6000=11000 BUSD, but in reality, only received 6000 BUSD.

How to avoid such scams: Carefully verify bank accounts or wallets to confirm you have truly received all due funds under the pending C2C transaction.

Phishing

Phishing is a malicious attack where scammers use fake information to deceive users into sending assets or information. For example, criminals may impersonate customer service representatives of C2C platforms to obtain private information or access to cryptocurrency accounts.

How to avoid such scams: Scammers may send fake security alerts related to accounts via email or SMS. When reviewing such messages, do not click on unknown links before verifying the source. Always seek help only through official C2C trading platforms.

How to identify risky transactions before trading

Review C2C profile information. Before trading with any potential counterpart, conduct due diligence. Things to look for include:

Trading volume: A low number of transactions does not necessarily indicate a problem, but high trading volume may suggest a more reliable partner.

Completion rate: If the completion rate is below 80%, reconsider whether to proceed, as it may indicate frequent transaction withdrawals.

Profile or user feedback: Few positive reviews or many negative comments may indicate higher trading risks.

Carefully review the advertisement. Evaluate each C2C ad to determine if it meets your needs and goals. Consider price, quantity, accepted payment methods, limits (such as transaction caps), and other terms and conditions. For example, if the C2C price deviates significantly from the market price on other platforms, the ad may be suspicious.

During the transaction

Be cautious when communicating with C2C buyers. Warning signs include:

Buyers urging you to release cryptocurrency.

Buyers requesting unnecessary information.

Unable to contact the buyer again.

Buyers borrowing money from you.

Payments from buyers are less than the agreed amount.

Payments from buyers are more than the agreed amount.

Buyers requesting to communicate outside the C2C platform.

Buyers insisting on third-party payments.

When communicating with C2C sellers, watch out for:

After you make a payment, the seller asks you to cancel the order.

Sellers requesting to communicate outside the C2C platform.

Sellers asking to conduct transactions outside the platform.

Sellers requesting additional fees.

After the transaction

Warning signs when communicating with C2C buyers include:

You do not receive the corresponding assets after payment.

Buyers pay with a bounced check.

Your bank account is disabled after receiving the buyer’s payment.

Buyers initiate a refund request through their bank after you send cryptocurrency.

Common methods to prevent scams include trading on trusted platforms

Choose leading C2C platforms with robust security features. Common features include:

Risk management functions: If the platform enforces specific requirements before transactions, it helps reduce invalid, unreliable, or low-quality ads. Better practices include using advanced order matching logic that only pairs users with trusted traders and verified ads, along with risk management algorithms to monitor suspicious activity.

Some optimized algorithms can even restrict the trading activities of potential malicious actors. Additionally, withdrawal limits or delays help protect user funds.

Know Your Customer(KYC) protocols: If the C2C platform has KYC protocols, it can help beginners find reliable trading partners through user verification. This way, beginners can trade with verified advertisers who have trustworthy trading records and source of funds.

Escrow services: Escrow services enable safe exchange of goods or assets between buyers and sellers. Reputable third-party institutions (usually the C2C platform) handle the transfer of funds between parties, ensuring transaction security and fairness.

Customer support: Although C2C transactions typically do not require intermediaries, the platform’s customer support team can intervene if users encounter transaction issues.

Automated payments: With innovative automatic payment methods, C2C platforms can release cryptocurrencies from escrow accounts automatically without manual intervention. Buyers receive their newly purchased assets immediately, and sellers do not need to manually verify each payment or release assets.

Blacklisting features: You can blacklist suspicious users. If you have had unpleasant experiences with a user, you can block them. Once blacklisted, the user cannot transact with you again.

Communicate only through the platform

Avoid contacting potential trading partners on suspicious websites, and be cautious of prices that seem too good to be true. Additionally, communicating through external channels makes it easier for scammers to file false disputes and deny the existence of the transaction.

Verify transactions carefully

Always verify all information of your trading partner during the transaction. Carefully check all receipts and transaction records to ensure they have not been tampered with digitally. Here are some tips for identifying fake payment proofs:

Text overlaps

Inconsistent colors

Inconsistent formatting

Size discrepancies

You can also use free online image forensics tools. Search for “fake image detector” or “image forensics tools” for relevant information.

Capture screenshots

Keep all communication and transaction records in case you need to file a complaint.

Post targeted ads

If you have established a cryptocurrency network, ensure that ads are only visible to the people you want to trade with. Hide your ads and share them only with specific individuals, such as trusted contacts or users you have successfully traded with before. Hiding ads is also very helpful for large transactions.

Blacklist suspicious individuals

Proactively block users with whom you have had poor trading experiences to prevent fraud and other behaviors that could affect your trading experience.

File complaints

If you encounter issues, contact customer service and file a complaint. Provide all relevant evidence related to the transaction to help customer service assist you better.

Conclusion

To protect your assets, it is crucial to stay alert to potential risks associated with C2C trading. This includes understanding the terms and conditions of any agreement, being vigilant for warning signs, and using platforms with strong security features.

Always stay cautious when participating in any C2C transaction, and contact customer service if in doubt. Staying alert and taking necessary precautions will allow you to fully enjoy the benefits of C2C trading. **$BTC **$ETH **$BAT **