TheCoolDoc shares his unfortunate experiencing in day trading crypto through the payment services giant
A Reddit thread that was posted yesterday revealed that a netizen behind the moniker “TheCoolDoc” had his account permanently banned by PayPal as a result of day trading cryptocurrencies. The post explained that the company’s system had flagged his frequent cryptocurrency buying and selling as “item sales”.
“The system flagged my account thinking I was selling items worth $10000 in one week when I hadn’t done so in the last 6 years I’ve held a PayPal account (US account btw)”, TheCoolDoc wrote.
A day after, TheCoolDoc discovered that the company decided to permanently limit the account “due to potential risk”. The message to him added that he will no longer be able to conduct business using PayPal.
PayPal also imposed a 180-day hold on the $462 in his balance.
PayPal announced its support for the cryptocurrency space in October of this year when it stated that it would allow users to buy, sell and hold cryptocurrencies. The service is made possible due to their partnership with Paxos, and a Bitlicense from the New York Department of Financial Services (NYDFS).
The payment services giant explained that the US account holders would be able to conduct transactions in Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH) and Bitcoin Cash (BCH) directly within the platform’s digital wallet. However, payments that are made across the PayPal network with the use of cryptocurrencies will be settled in their fiat equivalent.
PayPal is effectively handling the transaction costs for each crypto purchase and sale—a noteworthy detail because TheCoolDoc, who averaged $10,000 per week through day trading, is likely to have placed a heavy burden on the platform with his transaction costs.
“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange”, PayPal stated.
It appears that the payments giant still has some way to go in the refinement of their crypto service, as illustrated by TheCoolDoc’s experience.
The user recently updated the post and revealed that the account could not be retrieved as the company does not have an option to appeal final reviewed decisions.
“She genuinely wanted to help me and I believe she understood how crazy this ban was because I didn’t sell items to anyone except PayPal (PayPal shows as the buyer and seller when you purchase from ‘PayPal Crypto’). She finally understood it was a day trading like thing and even after that there’s no appeal option (she tried) and it’s final”, TheCoolDoc wrote.
This has served as a deterrent for many users, convincing them to sidestep the temptation of high-frequency trading on PayPal for now.