Most cryptocurrency users are well aware that buying or selling crypto with PayPal is a big problem. In most cases, it is something one should avoid, as there is always the risk of fraud or even a chargeback. It now appears the company itself is actively freezing user accounts connected with any cryptocurrency-related activity. While some people may consider this to be borderline illegal, the company is certainly within its rights to freeze accounts and make funds inaccessible for extended periods of time.
Avoid PayPal When Dealing with Cryptocurrency
It is a mystery why so many people still try to buy and sell cryptocurrency through PayPal. Although PayPal may be one of the more convenient and commonly-used online payment methods out there, the company doesn’t like Bitcoin or other cryptocurrencies all that much either. In fact, the platform protects neither buyers nor sellers of “digital items” like cryptocurrencies.
One of the big risks when using PayPal to sell cryptocurrencies is that buyers can always perform a chargeback. If the buyer claims he or she never received the cryptocurrency in question, they will probably get their money back. Even if they did receive the money, and the seller can prove it, it is still up to the company itself to determine whether or not a refund request is valid. In most cases, the sellers will get the short end of the stick, but that is only to be expected.
Things have certainly escalated lately, as the company is cracking down on cryptocurrency activity even further. Some users report their PayPal accounts have suddenly been “frozen” and their money made inaccessible for 180 days. This is not something a lot of PayPal users will like whatsoever, but it is evident the company doesn’t take kindly to Bitcoin and altcoins right now.
Paypal has banned my account for selling CryptoCurrency. They have Frozen my sale payments for 180 days with no appeals! Can they legally do this? I have bills to pay and never had complaints and they never said anything every time I got scammed and called. Now I get this letter pic.twitter.com/Dbycl5kHWG
— Irish Girl Cryptocurrency (@IrishGirlCrypto) November 28, 2017
If people bothered to read the PayPal Terms of Service, they might notice the company can close user accounts or freeze their funds whenever they feel the need to. Although it may not happen all that often, there is no option available to appeal such a decision, and users will have no choice but to accept the penalty. Even when the 180-day period ends, the company is allowed to keep the money frozen for another similar period, after which they will decide whether or not the account in question will be closed permanently. For some people, this will mean not being able to access thousands of dollars for up to a year, without any recourse.
Moreover, people who actively sell any form of cryptocurrency through PayPal are now considered to be “currency dealers or an exchange”. These service providers must always obtain specific authorization before they are allowed to use PayPal to process payments. In the case of the current string of activities, none of the users attempted to receive such authorization, which means their accounts got flagged automatically. Users failing to comply with the official guidelines will have their accounts closed, with no option to appeal.
It is evident anyone looking to sell cryptocurrencies should use LocalBitcoins or other platforms and never deal with PayPal ever again. The company is rock solid when it comes to normal payments, but it has a clear disdain for cryptocurrency activity, which is only to be expected. There is no reason to deal with PayPal to buy or sell Bitcoin and altcoins, as there are so many other payment options one can choose from. The sooner people realize this, the better it will be for everyone involved.