TheCoolDoc informed the crypto community that his Paypal account had been blocked and his funds frozen for 180 days, after he had made several transactions within the company's weekly limit.
Yesterday, the social network Reddit was flooded with comments after the user with the pseudonym "TheCoolDoc" claimed that Paypal had permanently closed his account. cryptocurrencies, on the platform and blocked their funds for 180 days.
Paypal recently opened its new cryptocurrency services for eligible US customers on the platform, which includes the purchase of cryptocurrencies such as Bitcoin, Ethereum, Bitcoin Cash, Litecoin and others, as well as their storage and exchange by fiat money and the possibility of making purchases at authorized merchants. Likewise, Paypal announced that due to the high demand for cryptocurrencies, it decided to increase its maximum weekly transaction limit from $10.000 USD to $20.000 USD, doubling the amount initially allowed for these services.
TheCoolDoc, one of the Paypal users chosen to be among the first to use these new services in the United States, claims that he made cryptocurrency transactions without exceeding the maximum weekly limit of $20.000 USD. So, why did Paypal withdraw its services? Everything seems to indicate, and TheCoolDoc himself affirms it, that he was making cryptocurrency transactions without exceeding the maximum weekly limit of $XNUMX USD. trading operations with cryptocurrencies, something that does not seem to be the objective of Paypal's crypto platform.
“All of which [the trades] were dip buys and high sells (as usual), all within a one week period.”
TheCoolDoc claims that he made 10 of these transactions and that Paypal's system flagged his transactions as sales for an amount greater than $10.000 USD, so he contacted customer service for a review. Paypal asked him to justify each of the transactions he made, and the next day blocked his account.
It may interest you: Update: PayPal confirms opening of cryptocurrency services in the United States
Limited due to "potential risk"
The company sent TheCoolDoc a message the next day saying that his account had been permanently blocked after a review of the transaction records. The company flagged TheCoolDoc's transactions as "potentially risky," assuming that the user was carrying out some illicit activity such as money laundering. For this reason, Paypal blocked his account and froze his funds for 180 days, as well as informing him that he would not be able to use the platform's services again in the future.
At the time of the block, TheCoolDoc had just over $460 USD in his Paypal account, and he claims that it was blocked without explanation and without the right to appeal. This user's complaint comes less than 15 days after Paypal activated its cryptocurrency services in the country.
Who is right? Debate in the crypto community
On Reddit, the community began to express the unfairness of the centralized model that Paypal offers to access cryptocurrencies, and the risk that exists when buying bitcoins or any other cryptocurrency through this platform; but there are also those who defend the decision that the company made.
Those who support TheCoolDoc claim that Paypal has no right to freeze the funds without evidence because it would be a federal crime. Others claim that this is the first example of the problems of centralization in the crypto economy and that an investor or crypto trader whose funds are blocked for a period of 180 days or more just for "stupid things" can lose a lot of money. There are even those who are outraged by pointing out that Paypal simply expelled the user from the platform.
But there are also others who claim that the actions taken by the company are correct, because the cryptocurrency service was not designed for trading itself, but for buying and storing cryptocurrencies, and making payments in authorized merchants, and that what TheCoolDoc was doing was causing losses to the company due to its policy of not charging commissions until 2021, so this may be a possible explanation for Paypal's actions, to avoid losing money with users who carry out high-volume operations.
“PayPal is not a cryptocurrency exchange, their service is meant for people to hold bitcoin and then spend it at their merchants when they turn on that capability. They are currently paying all the trading fees when you buy or sell, because they are actually buying the bitcoin for you on ItBit, so if you go and trade constantly, they will lose a ton of money covering those fees… Their service is supposed to be more like a Bitcoin bank account, not a trading account.”
Other users also said that PayPal should have warned about these types of restrictions in advance, since by offering its services without commissions it was evident that many would take full advantage of it.
Decentralization and the Bitcoin Revolution
Although there is a great debate about what happened with Paypal and TheCoolDoc, with opinions for and against, we must not forget the golden rule by which Bitcoin was born, and why this cryptocurrency constitutes a revolution to our current financial system:
"Not Your Keys, Not Your Bitcoin (Nor are “your keys, not your Bitcoin)”.
This popular phrase in the crypto community is the slogan of every bitcoiner who fully understands the idea with which Bitcoin was created, «If they're not your keys, they're not your bitcoins«The true meaning of Bitcoin lies in decentralization, in breaking with the conventional financial system that has caused so much damage to our society, and that constantly harms the most disadvantaged.
Bitcoin is an open-source, decentralized, and transparent system that empowers us as a society over our own finances again, eliminating any risk or exposure to vulnerabilities that affect our funds. So, although a company of Paypal's stature entering the crypto space can be positive in favoring the adoption of cryptocurrencies by its millions of users, it can also harm users with its arbitrary and abusive actions.
TheUltimateSalesman, another Reddit user, stated that there is no reason to use Paypal, as it is literally the manifestation of everything that is wrong with the current financial system.
In August, the cryptocurrency specialist lawyer Justin Winston Ono Wales, stated on his Twitter account that a decision by the California court had strengthened the meaning of the phrase Not Your Keys, Not Your Bitcoin, by dismissing the lawsuit filed by Darrell Archer against Coinbase, the second largest exchange by trading volume.
«Not a single satoshi in Paypal»
A few hours after posting on Reddit, TheCoolDoc reported that his account had been fully recovered, though he implied that his funds were still unavailable.
“I received an email today that my account was fully recovered. I no longer have any “funds now,” but beggars can’t be choosers.”
TheCoolDoc said that despite this “restitution” he would not buy a satoshi or any other cryptocurrency through Paypal again.
Continue reading: Comptroller of the Currency Sees No Future for Bank Deposits
