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Learn to identify scams when trading on a cryptocurrency exchange like Binance

Key facts:
  • With the rise in popularity of cryptocurrencies, scams are becoming more and more common.

  • There are effective ways to protect yourself from scams when trading on P2P exchanges.

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Exchanges peer-to-peer (P2P) have become one of the most popular options for buying and selling bitcoin (BTC) and other cryptocurrencies among users. Binance P2P, AirTM and LocalBitcoins are an example of this type of platform. But there are some risks when marketing that you should know to avoid scams.

If you are new to trading in P2P exchanges, here are some tips that will help you avoid being a victim of fraud. We will show you the factors that you should take into account to decide if it is a good idea to trade with a certain user or not.

What aspects should you know about your counterpart when trading on a cryptocurrency exchange like Binance?

P2P exchange platforms have multiple advantages, something that you surely know if you are a frequent trader in these types of exchanges. Now, as in any cryptocurrency trading platform, there are several risks that put your funds and personal information at risk.

Nobody wants to be the victim of a scam, and the best way to protect yourself is by taking some preventive measures. Let’s start with the factors that you have to analyze from your counterpart by trading on a cryptocurrency exchange such as Binance.

Verification level Know Your Custormer (KYC)

Binance users with a verification badge must meet various requirements to obtain it.
Source: Binance

When we talk about verification Know Your Custormer (KYC) or Know Your Client, what exactly do we mean? It’s about a process used to verify the identity of users, and it is a security measure widely used by most cryptocurrency exchanges.

With the KYC, financial institutions seek to comply with laws and regulations against money laundering (AML), terrorist financing, and fraud. Their main goal is to make sure that customers are who they say they are. Thus, if a legal dispute or inconvenience occurs, it will be easier for companies to comply with the regulations of the territory where they offer their services.

On Binance you can find out if a user has a verified account by clicking on their name. There you will get all the information you need to know about your counterpart. What’s more, verified merchants have a yellow badge in their public profile, so it will be very easy for you to identify them.

To earn this badge, users must provide certificates of residency, videos for facial recognition, banking tests, reputation tests, and more. So if you want to feel more secure when trading on Binance P2P, we recommend that you look to trade with people who have the yellow badge.

On crypto exchanges like Paxful, KYC verification is mandatory. A) Yes protect their customers from potential scams by other users. In the case of Paxful, they request data such as name, telephone number, email, identity document and address; although the requested data varies according to the level of verification. The higher this level, the more likely you will feel confident in your counterpart.

Comments from other users

Another important point that you have to consider about your counterpart is the comments of other users. Ask yourself: How many comments do you have on your profile? Are they mostly positive or negative?

If many of the comments are positive, you are probably facing a good option for trading cryptocurrencies. On the contrary, if they are negative, it is better that you avoid headaches and choose someone else.

Reputation in the community

Reputation is a good way to determine how trustworthy a seller or buyer is on a cryptocurrency exchange like Binance. Most exchange platforms strive to create a community in which it is safe to trade.

For example, at LocalBitcoins you can’t just tell if you should trust a merchant from the comments. When entering a profile, it is possible see how many people trust this particular user, and there is a score based on the comments, which can be up to 100%.

Number of successful transactions and release time of funds

On Binance you can find details of the advertiser, such as total orders and completion rate. Source: Binance

Both in Binance P2P and in LocalBitcoins you can see the number of exchanges made or the completion rate of a merchant. Binance shows the total of trade / buy orders, the completion rate in 30 days and the orders executed in this same period. In the case of LocalBitcoins, you have access to details such as number of confirmed exchanges and trade volume.

A factor that is also useful to know is the average release time of funds, and this is available on most P2P platforms. You most likely don’t want to wait too long when making the exchange, so the shorter the release time, the better for all parties involved.

Blocked users

LocalBitcoins allows you to know the number of users who have blocked a merchant.
Source: LocalBitcoins

Has your counterpart been blocked by a large number of users? Then that’s not a good sign, undoubtedly. Although there can be many reasons why someone decides to block a seller or buyer, one of the main reasons is scams or serious disagreements.

To feel more secure, trade with those who have not been blocked by others. Sure, the higher the number of exchanges, the more likely a user will have blocks, but be wary of those who have a moderately high number.

How to avoid scams on P2P exchanges like Binance

Unfortunately, bitcoin and other cryptocurrency scams continue to rise. That is why it is so important that you stay alert when trading on P2P exchanges. Take note of these measures so that you are not part of the fraud statistics:

Be wary of offers that seem too good to be true

Does anyone offer to sell cryptocurrencies for a price well below the market price and accept a huge number of payment methods? This you should already consider it a red alert on any exchange you trade, be it Binance or another.

Scammers often run attractive advertisements to entice the less experienced. This is a matter of common sense, as no one in their right mind trades for profit rather than profit. You should also be suspicious if your exchange counterpart is willing to pay a higher-than-market price for a cryptocurrency.

Always verify payment before releasing funds

On its website, Binance recommends not releasing funds until payment has been verified. Source: Binance.

Consider this the rule of thumb when doing P2P trading. NEVER release the funds before ensuring that you actually received the money in the agreed medium and the correct amount.

Do not trust the word of your counterpart or photos of payment vouchers, as sometimes they turn out to be false. This is one of the easiest ways to avoid cryptocurrency scams: always check.

Avoid making payments or communicating through third-party platforms

It is common for scammers to try to pressure you to converse by means other than the P2P platform, whether by text message, email or messaging applications. But do not be convinced, because what these people want to avoid is that the record of their conversation remains in the exchange, which would make an investigation by the company difficult.

On the other hand, transfer the funds directly from the cryptocurrency exchange you choose to use, as this will protect your transaction. AND Beware of those who want to pay you using third-party accounts. It may not be a good sign. In fact, on its website, Binance warns against this common practice among scammers.

Verify the seller / buyer information

This is related to what we mentioned above. If the details of the merchant on the platform do not match those of the payment method, you become suspicious. You could be the victim of triangulation, a type of scam in which criminals use third-party accounts to carry out the fraud.

Before deciding if you are going to sell or buy cryptocurrencies from someone in particular, enter their profile and analyze all the data that we indicated at the beginning of the article.

Choose platforms with a deposit guarantee

Binance, Paxful and AirTM are examples of P2P platforms that have a deposit guarantee, which works like a smart contract. This means that the buyer’s money is held by the exchange until the transaction is completed successfully. Thus, both parties are protected and it is guaranteed that the funds arrive at the right place and at the right time. If either party does not meet the conditions when trading, it is possible to appeal to cancel the transaction.

Cancel the transaction if you have reason to be suspicious

Is the buyer taking too long to make the deposit? Is he pressuring you to release the funds early? Faced with these or other similar signs, it’s best to cancel the transaction and find another merchant.

It may seem like a waste of time, but it is better to be safe than sorry. Spending a few more minutes doing the trade can protect you from being scammed.


It is in your hands to take all the necessary measures to avoid scams when trading cryptocurrencies on P2P exchanges such as Binance. Remember that a little carelessness is enough to be the victim of a scam. So stay alert and don’t let your guard down at any time. That will allow you to trade cryptocurrencies without the unpleasant consequences of trusting the wrong people.

Knowing the reputation, the KYC verification level, the comments and the number of completed transactions of your counterpart is the first step to sell or buy digital currencies safely, apart from the other recommendations and suggestions that we gave you in this article. And don’t forget the golden rule of P2P exchanges: do not trust, check.

Tammy Sewell is our Writer and Social at OICanadian.com. Tammy loves sports, she writes our celebrities news. She spends time browsing through several celebs news sources as well the Instagram. Email: [email protected] Phone: +1 513-209-1700

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