How can I avoid P2P crypto scams and protect my assets?

Published on Sep 2, 2023Updated on Apr 12, 20247 min read645

Fraud remains a tale as old as time. Today, cybercriminals are getting smarter, finessing their art as they cash in on cryptocurrency's growing buzz. Crypto scams are common in peer-to-peer trading (P2P), where a buyer and seller connect directly without a third party or intermediary to buy or sell cryptocurrency.

At OKX, our user's security and privacy are of utmost importance. As part of the OKX escrow service we provide to safeguard our user's P2P transactions, OKX will hold crypto for the buyer during the transaction. The purchased crypto assets will only be released to the buyer after the seller confirms that payment has been received.

Traders must understand how they're being targeted to protect their crypto holdings and ensure a safe, seamless P2P trade. To combat the rising cases of P2P frauds, we've outlined common crypto scams and provided tips on how to avoid falling prey to such schemes.

How do I avoid P2P crypto scams?

P2P crypto scams can be avoided with a few simple safety measures as follows:

  • Confirm all P2P transactions: always confirm if you've received the crypto in your OKX account and fiat in your banking account before authorizing the transaction - i.e. sending payment to your seller or releasing your crypto from the OKX platform to your buyer. Don't rely solely on transaction proof as they may be doctored.
  • Verify user's identity: avoid transacting through a third party and ensure that the user's payment account details match their identity on OKX. At OKX, verified P2P merchants are required to complete a higher level of identity verification to better safeguard your assets and resolve disputes if they arise.
  • Raise dispute with OKX's customer service: if you detect any suspicious activity or are unable to reach an agreement, immediately contact our customer service for support. OKX's customer service team investigates every case seriously and action will be taken against scammers.
  • Keep your communication strictly on OKX platform only: refrain from employing external communication platforms such as Telegram, WhatsApp, Discord, etc, to communicate with your buyer or seller. Conversations held on the OKX platform offer you greater security and safeguard your rights effectively. Learn more about your transaction rules here.
  • Don't be intimidated by scare tactics: don't be alarmed by the scare tactics employed by scammers. Make a habit of gathering screenshots and concrete evidence of your interactions to support your dispute. Don't hesitate to walk away from deals if they're appearing suspiciously.
  • Avoid transacting outside of OKX's P2P platform: P2P crypto scams occur when scammers bypass a platform's escrow system and transact externally. Limit your P2P transactions to OKX's P2P platform to add an additional layer of security to your P2P trades. OKX's P2P escrow system holds the traded crypto on our platform and releases them to the buyer only when transactions are authorized.

What are the common types of P2P crypto scams?

1. Fake receipts

Fake receipt scams involve scammers who send you a bank receipt to substantiate their claims that they've already sent you money. They'll also insist that the money was sent through an escrow transaction and will only be reflected in your wallet after you release your crypto holdings.

In most instances, scammers will use strong language to pressure you into giving up your crypto assets. These scammers can also easily manipulate data, including receipts, photos, or screenshots.

How to prevent fake receipt scams:

  • Always double-check your payment account to confirm you received the appropriate amount before releasing any crypto assets.
  • Don't be pressured to release your crypto holdings immediately. Ensure that you've received your payment in a bank account or wallet before releasing crypto.

2. Impersonators

By claiming to be a representative of OKX, scammers could contact you and ask that you release your crypto holdings immediately to prevent them from being frozen. These impersonators obtain your contact information based on the email address or phone number that you provide when submitting payment.

These scammers could also impersonate celebrities or government officials to lure victims into giving away their crypto assets. According to the Federal Trade Commission, business and government impersonation scams accounted for $133 million in reported crypto losses since 2021. More recently, scammers impersonating Tesla CEO Elon Musk got away with more than $2 million in crypto assets.

How to prevent impersonators:

  • Don't transfer your digital assets to anyone impersonating a member of OKX. Under no circumstance will our customer service officials ever threaten to freeze your assets or ask you to release your crypto holdings.
  • Ensure that all emails from OKX are sent under the official domain.
  • Always install an anti-phishing code for all emails sent by OKX. An anti-phishing code allows you to identify better if emails are legitimately sent from OKX.

3. Social engineering

Another common P2P crypto scam is social engineering, where victims are baited into cancelling or authorizing transactions. For instance, scammers may claim that there's an issue with the victim's identity verification or account and request for the order to be cancelled after the funds have already been transferred.

Scammers may also attempt to legally void their transfers with their banks by claiming that their bank account was stolen or hacked. In this scenario, scammers may further convince victims that cryptocurrency is illegal or not within the purview of local authorities in order to silence and scare them into dropping the matter.

How to prevent social engineering:

  • Avoid canceling a P2P transaction if you've already sent a bank transfer to the bank account shown in the payment method chosen in the P2P order. Avoid releasing a sell order if you don't see the funds in your bank account (or wallet) added as the payment method in the P2P order.
  • Don't be intimidated by scare and manipulation tactics. Gather screenshots and evidence of your interaction with the scammer for OKX P2P to settle the dispute.

4. Chargeback scams

Chargeback scams occur when scammers take advantage of chargeback features on some payment platforms to reverse or cancel the initial payment made once the P2P order is completed. The scam is complete once the victim approves the transaction, resulting in the funds being transferred from their bank account or crypto wallet.

How to prevent chargeback scams:

  • Avoid using payment platforms that support chargeback, such as PayPal.
  • Don't rush into approving P2P transactions. Always check your bank account or crypto wallet to confirm that you've received the funds from your P2P deal before you see the "I have received the payment" status in the P2P order and authorizing crypto transfer.
  • Only trade with verified merchants. Verified P2P merchants on OKX require a higher level of identity verification, so P2P disputes can be handled more efficiently.

5. In-person cash transactions

In this crypto scam, users prefer to buy and sell cryptocurrency face-to-face and in cash. However, by transacting offline, scammers could pay you in counterfeit money or obtain payment without releasing the crypto.

In such events, the OKX customer service team can't validate the transaction because of the lack of legitimate proof. Therefore, traders who select this payment method type must be aware of the risks before transacting in cash.

How to prevent in-person cash transaction scams:

  • Always select a public and safe place to trade your cryptocurrency in person. Avoid meetups in private spaces like an individual's home and validate the shop address of the merchant before the meeting.
  • Do validate that the cash received is legitimate and the amount accurate before releasing any crypto assets.
  • During meetups, always bring someone you trust and never go alone when conducting offline transactions.