Bitcoin [BTC] scams on the rise; Indian cryptocurrency trader almost loses two BTC on LocalBitcoin

A cryptocurrency user from India has almost lost two Bitcoins on LocalBitcoins. The attacker reportedly used sophisticated methods such as SMS spoofing, evidence tampering, and downright lying to the admins of Localbitcoins to facilitate the crime.

The recent banking restriction on cryptocurrencies in India has resulted in individuals using peer-to-peer [P2P] exchange platforms such as LocalBitcoins. The exchange platform is one of the widely accepted P2P Bitcoin exchange in the world. Despite its popularity, it is also one of the most vulnerable platforms, which poses a higher chance of users being scammed.

According to the post on Coin Crunch, Arun, a frequent trader on the LocalBitcoin platform, placed an advertisement to sell two Bitcoins, worth about $13,000 [9.5 lakh INR]. Arun was reportedly skeptical of trading with the buyer Shoibsheikh786 as he was new to the platform and did not have any feedback score.

Furthermore, Arun could not cancel the trade request as it was a standard protocol that when a buyer opens a trade request, the seller cannot cancel the trade.

Arun had asked for a valid proof from the buyer and soon realized that the buyer’s IP address was clearly showing Indonesia, whereas his phone number was verified to be from Canada. In addition, the buyer had an Indian Passport as ID Proof. “Shamin Ahmad” from Utter Pradesh said the details provided in the passport.

After verification of the buyer, despite the faulty claims, Arun asked the buyer to transfer the amount to his bank account. At this point, the buyer claimed to have already transferred the money and sent Arun a fake screenshot of INR 8 lakh transferred from PayTM Savings Bank to the Axis Bank account of Suman Swami, who is not related to Arun.

Axis Bank stated that the account number was invalid and did not belong to anyone. The buyer had reportedly raised a complaint with LocalBitcoins claiming that Arun had not sent the two Bitcoins, in spite of him transferring the money.

On most of the P2P exchanges, the sellers’ tokens are held in Escrow until both the parties verify their details and confirm the fiat transactions. Since Arun did not get the payment, he did not confirm the details and this gave an opportunity to the buyer and seller to raise a dispute on LocalBitcoin.

The scammer also narrated a fake story of an Over-The-Counter deal made by Suman, who according to the scammer was the individual who was selling the Bitcoins. Furthermore, the scammer stated that Suman sent a text message with his Axis bank account number to transfer the money.

The report revealed that the scammer also shared his SMS conversation records and a video of them messaging each other on the phone. The report added that the scammer was able to use a technique called Spoofing, which enabled him to have a chat with Arun’s number without Arun’s knowledge.

Arun was put into a dilemma as he could neither prove that he did not know Suman Swami, nor could he produce a statement of Suman Swami’s bank account. The admin from LocalBitcoins postponed the decision and this was when Arun found the evidence to prove that the scammer was at fault.

Arun realized that the phone number in the SMS records shown by the scammer was only similar to Arun’s number and had an incorrect digit. Arun soon reported this to LocalBitcoins and confronted the hacker, after which the scammer canceled the trading request and apologized to Arun.

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