Binance P2P Sellers Risk Bank Account Freezes from Tainted Fiat

For Indian crypto traders using Binance's peer-to-peer (P2P) marketplace, selling USDT can seem like a routine transaction.

A seller matches with a buyer, receives Indian rupees through UPI or a bank transfer, and releases the USDT held in escrow once they confirm the payment has arrived.

However, if the received rupees come from money connected to a cybercrime committed before the transaction, sellers may face bank account freezes and lengthy attempts to clear their name.

The issue was highlighted on Reddit's r/CryptoIndia community, where users described being frozen out of their accounts weeks after selling USDT and receiving payment through UPI. One verified Binance P2P merchant reported that their bank placed a lien on their account due to a buyer allegedly connected to a cybercrime complaint.

Binance acknowledges the risk in its guidance for sellers, advising them to preserve transaction records, contact their bank, and cooperate with local authorities if an account is frozen. The exchange also notes that its P2P marketplace uses escrow, identity verification, and other monitoring mechanisms to reduce fraud risks.