Cryptocurrency traders engaged in peer-to-peer (P2P) transactions are becoming prime targets for cybercriminals who exploit these platforms to launder stolen money. This alarming trend has left many traders entangled in fraud investigations as stolen funds make their way into their accounts under the guise of legitimate transactions.
The modus operandi involves fraudsters approaching traders with offers to buy cryptocurrency. They transfer stolen money, often linked to victims of online scams such as loan application fraud, OTP thefts, and courier fraud, to the trader’s account in exchange for digital currencies.
Mohammad Ismail, a Bengaluru-based cryptocurrency trader, shared his ordeal, which began with an unexpected call from Gujarat police. “I received a call informing me that my company’s bank account had been flagged in a cybercrime investigation,” he said. Shocked, Ismail travelled to Gujarat to respond to the summons.
“The Gujarat police suspected me of being part of a gang of online scamsters, as stolen money from a complainant was traced to my company’s account,” Ismail explained. “However, I clarified that I am a legitimate trader who pays taxes on all transactions.”
Ismail revealed that the incident stemmed from a P2P deal two months earlier. An individual, posing as a trader, had contacted his company to purchase 4,000 Tether coins at ₹84.84 per coin. Payment was made to Ismail’s account, and the transaction appeared legitimate until police linked the funds to stolen money.
“We only realised the money was stolen when the police informed us,” Ismail said. “After discussing with other traders, we found this issue was widespread. Fraudsters convert stolen money into cryptocurrency because it’s easier to cash out in crypto-friendly countries like Dubai, where regulations are more lenient.”
Other traders have reported similar experiences. One trader explained how criminals are increasingly turning to cryptocurrencies for laundering money. “Moving stolen money through multiple accounts is risky because transactions can be traced. Converting it to crypto provides a safer and quicker route,” he said.
A senior police officer handling cybercrime cases confirmed this growing trend, noting that P2P transactions are particularly vulnerable to exploitation. “Traders must conduct thorough background checks of buyers before proceeding with transactions to avoid falling victim to such scams,” the officer advised.
The rise in these fraudulent activities underscores the urgent need for enhanced vigilance among cryptocurrency traders and stricter oversight in P2P trading platforms. As the use of digital assets continues to grow, addressing these vulnerabilities remains critical to safeguarding the legitimacy of cryptocurrency markets.
Cybercriminals exploit peer-to-peer crypto transactions to launder stolen funds, leaving traders like Mohammad Ismail caught in fraud investigations. Learn how this trend is impacting India’s cryptocurrency market.
