Earlier this month, global payments giant PayPal introduced cryptocurrencies to its user base of millions. Even though the service was initially available to only 10% of PayPal’s US-based users, the news was followed by a Bitcoin rally that pushed the price of the token beyond $13,000. Now, reports have emerged that PayPal is restricting user’s accounts for purchasing cryptocurrencies too frequently.
According to a Reddit user TheCoolDoc, PayPal has sent the user a message stating that their account has been permanently limited “due to potential risk.”The user went on to explain that they had made over 10 crypto transactions in one week, where they bought dips and sold the crypto when the price was high. PayPal had asked the user to explain every transaction.
“The system flagged my account thinking I was selling items worth $10,000 in one week when I hadn’t done so in the last 6 years I’ve held a PayPal account. I submitted the stuff for review with my photo ID and wrote ‘PayPal Crypto’ for each crypto transaction because what else could I say?” the user said.
Following this, PayPal responded in a few hours and noted that the user would “not be able to conduct any further business” using PayPal. The user continued that the remaining funds in his account ($462) were placed on hold for 180 days. However, the user has used other means to withdraw the funds.
Increased Purchase limit?
Earlier this month, PayPal had increased its purchase limit for U.S. customers. PayPal spokesman Aaron Gould had said:
“Due to initial demand from our customers, we’ve also increased our weekly cryptocurrency purchase limit from $10,000 a week to $20,000 a week.”
The Reddit user claims he has not exceeded this. TheCoolDoc said:
“I genuinely 100% know I did nothing wrong and it’s a misunderstanding because they think I made 50+ buy/sell transactions in a span of 1 week of items, when it’s just crypto.”
Concerns regarding Paypal’s cryptocurrency services were also voiced by another user going by the name of Cryptix001.
“I told them I was using PayPal to transfer money from one of my online accounts to my main checking account (Coinbase to checking) to bypass the longer withdrawal time. I had never had an issue doing this until it was a larger sum of money that I needed to pay some bills. It took them a nerve-wracking week before they finally agreed to release my funds. I’ll never use PayPal again.”
Meanwhile, one Reddit user tried explaining this, stating that PayPal’s actions could be because it loses money with users conducting high-volume trades.
“If you go and trade constantly they lose a ton of money covering those fees since they’re not charging any fees right now. Their service is supposed to be more like a Bitcoin bank account, not a trading account.”
There has been no official response from PayPal regarding this matter.