By Rushi Mehta: How criminals use P2P trading of Crypto Platforms to avoid Law Enforcement Activities
Cryptocurrency Platforms have created many innovative products from exchanges, DeFi, P2P Platforms, Wallets, Derivatives etc. One of the commonly used platform by cyber criminals is P2P platform.
◆ How does P2P platform work?
Unlike exchanges, similar to Stock exchange where buyer and seller are connected using market price and buyer does not know seller, P2P platforms provide direct connection from buyer to seller.
It is similar to Olx Platform which connects buyer of a sofa with seller of sofa. Platform helps exchange number or account and transaction takes place “Off” platform.
◆ Binance P2P
Snapshot of Binance P2P Platform
As seen in figure, a buyer can purchase cryptocurrency from Sellers listed. Every seller has a different price offering.
Buyer will submit the value (INR) of USDT he/she wants to purchase.
Binance then connects the buyer to seller and displays “Bank Account” details
Bank Account details of Crypto Seller
As soon as the money is transferred to Bank Account of Seller, USDT gets deposited in the crypto wallet of buyer. This is called P2P transfer.
Fraud money is used by cyber criminals to purchase crypto currency from genuine sellers. Flow is explained in the figure.
Flow of Fraud Money◆ Layering Transaction Tracing
Since fraud money is transferred by fraudster to Bank account of innocent crypto trader (seller), in case of transaction trail analysis, the account of seller gets freezed.
Further more, if the crypto trader has transferred money to his/her relative, their account also may get freezed. This P2P transaction is used to create layering for carrying out financial frauds.
◆ Closing Thoughts
Prompt regulation especially on P2P trading and sensitizing citizens on the risks related to same is need of the hour.
Thank for Rushi Mehta
