From Spayz.io expert Tatjana Meluskane, Chief Commercial Officer, SPAYZ.io
The rise of P2P trading and emerging threats
Peer-to-peer trading (P2P) continues to transform the payments landscape by offering a technology that overcomes traditional roadblocks to transactions, but it is also becoming a growing target for P2P scams and triangle fraud schemes. Its success stems from the speed, flexibility and accessibility it offers, opening new opportunities for financial entities in emerging and established markets. Yet innovation often brings new risks and challenges that need to be properly assessed. According to the J.D. Power 2023 U.S. Direct Banking Satisfaction, 8% of all banking customers say they’ve been victimised by a P2P scam in the last 12 months.
What is triangle fraud in P2P?
One of the persistent threats we are seeing in the P2P trading space is the so‑called triangle scam, a specific form of triangle fraud targeting P2P crypto transactions.
It’s a scheme that thrives on simplicity, designed to create significant disruptions across multiple parties exposed to it. This includes unsuspecting traders who can find themselves entangled in criminal investigations. This is the reason one triangle fraud needs to be recognised as a serious threat.
So how does the triangle scam work in practice for P2P platform users and traders? Simply put, it exploits the very foundations of P2P platforms that are integral to their success: mutual trust between parties and decentralisation. A fraudster can post an irresistible offer online, which attracts interest and attention, say an iPhone at a heavily discounted price. A buyer expresses interest and asks for the seller’s payment details. While this is happening, the fraudster is initiating a cryptocurrency trade with a legitimate P2P trader. While this is happening, the fraudster initiates a cryptocurrency trade with a legitimate P2P trader via the platform’s escrow system. Instead of paying the trader, the fraudster links the buyer to the trader and gives the buyer the trader’s payment details.
The buyer transfers the funds for what they believe is an iPhone purchase. The trader receives the funds, believing they are payment for the cryptocurrency, and releases the crypto to the fraudster. The end result is the buyer not receiving an iPhone, and the trader receiving funds from the buyer for a transaction they believe was for the crypto they were selling, meaning they are involved (inadvertently) in fraudulent activities. All the while, the fraudster has disappeared with the trader's crypto.
This is a simple example of a triangle scam. However, it poses reputational and regulatory risks that could undermine the industry's future development and erode trust in P2P payments and decentralised finance. If not addressed, this will become a systemic issue with reputational and regulatory consequences, potentially leading to slower payment processing. If not addressed, this will become a systemic issue with reputational and regulatory consequences, potentially leading to slower payment transactions and reduced confidence in P2P payments and decentralised finance, where triangle scams can spread quickly across platforms.
Three critical steps to prevent triangle scams
To effectively address this challenge and prevent an increase in triangle scams, the industry must remain vigilant and take a series of steps.
Step 1. Scrutiny of counterparties
The first is scrutiny. Traders need to scrutinise all counterparties, set very clear terms, and ensure that all transactions that seem dubious undergo an additional set of checks and balances. While this might lead to a slight delay in completing a payment, it shows both parties involved in a transaction that the platform takes security and fraud prevention seriously. This can be accompanied by licensed exchanges that offer filters to help identify trusted users, and these tools should be non-negotiable in any trading workflow.
Step 2. Blocking third-party payments
Second, P2P platforms need to refuse to accept payments from third parties. This means integrating technical safeguards and compliance protocols that automatically flag and block transactions involving unauthorised payers. A zero-tolerance approach to third-party payments sends a clear message to users and potential bad actors alike that only verified, direct participants are permitted to engage in financial exchanges.
Step 3. Following platform guidance
Finally, traders must resist the urge to act independently and be open to engaging with platform guidance. P2P platforms need to have integrated, non-bypassable protocols that safeguard all parties involved in a transaction. Regardless of the situation, traders should always defer to platform procedures and support channels, ensuring that every step of the transaction is properly documented and verified.
The industry must not only double down on user education, ensuring that traders understand the risks and responsibilities, but also implement more robust platform controls that detect and deter suspicious behaviour before it escalates. With the global cost of digital payment fraud projected to exceed $50 billion in 2025, regulatory clarity and platform accountability must go hand in hand.
Protect P2P innovation
Industry professionals need to elevate the conversation about best practices for tackling fraudulent activity. It means advocating for standardised protocols, encouraging transparency in dispute resolution, and fostering a culture where safety is a priority. If triangle scams increase, public trust in P2P platforms will decline, threatening the industry's future innovation and evolution.
