Any investment carries a potential risk. To lessen the risk when trading cryptocurrency, read our guide on how to protect yourself.
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 cryptocurrency. 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 cryptocurrency. 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 those details for free. Scammers can then use the gift card right away, and if you cancel the trade, the cryptocurrency will be released from escrow back to the scammers as well. Essentially, these users get the gift cards for free, and you lose your cryptocurrency.
If a seller ever asks you to cancel the trade after you’ve paid, don't cancel the trade. Instead, follow these steps:
- Click I have paid and start a dispute.
- The moderators will investigate the trade and award the cryptocurrency to the deserving party.
- Be ready to provide additional proof to the moderators, and extend your full cooperation to the investigation.
Another tip to protect yourself is to ensure that the seller is online before uploading documents and making payments.
Note: Reselling gift cards is strictly prohibited and is against our Terms of Service. Make sure that you are the original buyer of the gift card.
Trading outside Paxful
Many scammers will try to complete a trade outside of Paxful. They may ask for your contact details and attempt to get in touch outside of our marketplace. If you agree to trade outside of our platform, you lose the protection of our secure escrow.
Once you trade outside of Paxful, there are no guarantees that the seller will send you your cryptocurrency. And, our moderators won't be able to provide assistance since the trade happened outside of our platform. 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 cryptocurrency, there are also a few risks that you have to look out for while selling cryptocurrency on Paxful. Familiarizing yourself with these risks will help you protect your funds.
Reversible payment methods
Some payment methods on Paxful are reversible (such as PayPal or credit cards), meaning that the payer can request a refund. A common scam is when a fraudulent trader uses a reversible payment method. After the trade is completed, the scammer will then ask for a chargeback.
If you receive a chargeback, follow these steps:
- Go to your classic dashboard
- Click view past trades.
- Click the trade where you got the chargeback and you will see the trade page.
- Scroll down and under your instructions, you will see the receipt of the trade.
Gift cards that have already been redeemed
This is a common method that fraudulent traders use. It occurs when buyers upload details of gift cards that have already been used. Scammers may also say that they already made the payment or that they’re in the process of making the payment.
It’s important that you check the balance on the gift card before releasing any cryptocurrency. You can check the balance by redeeming the gift card and making sure that the balance is reflected in your account.
You will want to do this quickly, as the buyer may try to sell the same card to another seller. At the same time, be wary of scammers who ask you to trade 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 will block specific transactions. This is why it’s important to check the users’ ID and ask for a selfie to prove the trader's identity.
Be wary of blurry images, especially if the face and name on the card are not clearly visible. If a user is genuine, they are usually willing to complete all trade instructions. Some traders may refuse to give their ID, but It’s up to you to decide what proof you're willing to accept for each trade. Keep in mind that the more evidence you have, the more leverage you’ll have against the scammer.
The user is “very busy”
Be cautious with users who try to rush a trade. Some users may try to rush you and say they're "very busy". This is typically a red flag, as some scammers will try to push you into releasing your cryptocurrency. If you do send the scammer your funds, the fraudulent trader may send your cryptocurrency to a non-Paxful wallet. After they send their cryptocurrency outside of Paxful, they can get away without making a payment for the cryptocurrency.
Both buyers and sellers should carefully follow the trade instructions provided and finish the trade when all agreed-upon conditions have been met. For more information on how to secure your cryptocurrency, take a look at our security guide.