Potential risks when trading cryptocurrency

 Like with any other type of investment, there are certain risks involved with trading bitcoin on Paxful.

Part of protecting your investment involves familiarizing yourself with all the risks that come with trading crypto. Being aware of these risks puts you in a better position to make a profit off your bitcoin. In this article, we’ll cover most of the risks both sellers and buyers may encounter while trading crypto on Paxful.

 

Risks for buyers on Paxful

If you’re new to our marketplace, some dishonest users may try to take advantage of you. Here are a few ways they can do this:

Sellers asking you to cancel the trade after you’ve paid

This is a common tactic used by scammers where they’ll ask you to cancel the trade after you’ve paid for the bitcoin. For example, if you’re trading a gift card and you’ve uploaded all the details of your gift card, then you put yourself at the risk of giving them those details for free. The scammers can then use the gift card right away, and if you cancel the trade, the bitcoin will be released from escrow back to them as well. So essentially, they get the gift cards for free, and you lose your bitcoin unnecessarily.

If a seller ever asks you to cancel the trade after you’ve paid, never do. Click I have paid and start a dispute. The moderators will then investigate the trade and award the bitcoin to the deserving party. Be ready to provide additional proof if the moderators request it, and extend your full cooperation to their investigation. 

Another tip to protect yourself from being scammed is to make sure that the seller is online before you upload any documents and make any payments.

Note: Reselling gift cards is strictly prohibited and is against our Terms of Service. Make sure that you buy gift cards from the shop and you are the original owner of the gift card.

Trading outside Paxful

Many scammers will try to get you to trade outside of Paxful. They will ask for your contact details and try to get in touch with you outside our marketplace. If you agree to trade outside our platform, you lose the protection of our secure escrow. So, there are no guarantees that the seller will send you the bitcoin once you’ve made the payment. And, our moderators can’t step in and help you out as the trade happened outside our platform and we have no control over it. Remember that the escrow system is in place for your protection, whether you’re a buyer or a seller.

Risks for sellers on Paxful

Just like buying bitcoin, there are also a few risks that you have to look out for while selling bitcoin on Paxful. Familiarizing yourself with these risks will help you protect your funds.

Reversible payment methods

Some payment methods (such as PayPal or credit cards) on Paxful are reversible, meaning that they allow the payer to request a refund. One common tactic that scammers use is to trade using these payment methods and then later ask for a chargeback. For example, they would tell their credit card company that it was not them who made the transaction. In the case of PayPal, they would say that they did not receive the goods. PayPal normally sides with the buyer first but you can submit your evidence and hope that they refund your money.

So what do you do when you get a chargeback? The first step is to go to your seller dashboard and click view past trades. Click the trade wherein you got the chargeback and you should be able to see the trade page. Scroll down and under your instructions, you should be able to see the receipt of the trade.

Gift cards that have already been redeemed

This is another common method that scammers use. Buyers would upload details and images of gift cards that have already been used. 

It’s important that you never release the bitcoin before you check the balance available on the gift card. Make sure to redeem it and have the balance reflect in your account before you release the bitcoin. Do this quickly as well, as the buyer may try to sell the same card to another seller at the same time. At the same time, be wary as scammers will try to hurry you up by saying that they’re in a hurry and ask you to release the bitcoin quickly.

Buyers using a fake ID or a stolen credit card

Credit card companies usually cover their users from fraud. If their customers report that their card was stolen, they’ll invariably block the transactions. This is why it’s important to check the users’ identity and ask for a selfie to prove that they are who they claim to be. Be wary of blurry images where the face and names might not be clearly visible. If a user is genuine, they are usually willing to do everything required from their part, to ensure a smooth transaction. Although, some may refuse to give you their ID as they may consider it sensitive information. It’s up to you what kinds of proof you want to accept for the trade, but keep in mind that the more evidence you have, the more leverage you’ll have against the scammer.

The user is “very busy”

The user being “very busy” is usually a red flag when you’re trading on Paxful. As mentioned earlier, some users might rush you into releasing the bitcoin quickly, telling you that the payment has already been made or that they’re in the process of making the payment. What may really be happening is that the buyer has received the bitcoin, and immediately sends it to a different wallet (outside of Paxful), and once they have the bitcoin somewhere we can’t get to, they can get away without making a payment for the bitcoin. 

Be extra cautious with users who say that they’re really busy. Of course, it may not always be the case that the user turns out to be a scammer, but keep your guard up at all times. Both parties—buyer and seller—must carefully follow the trade instructions provided by the other party, and finish the trade when all conditions that they agreed on have been met.

For more information on how to secure your bitcoin, take a look at our security guide.

 

 

Articles in this section

See more