Note: I've also posted this on Reddit.

I'm hoping to get some advice from people on here on how to proceed and I'm hoping that ATOMBIT addresses this issue as I know they have an account here.

A little background.

I've been using Atombit for around a week now. It's an iPhone app that lets you purchase Bitcoins through PayPal. It was great and I'll admit the service was great. I would receive my Bitcoins about half an hour after purchasing them, even though they say it could take up to 24 hours. The customer service was also great, answering all my questions promptly.

Last night I came to make another purchase. Again, I've been purchasing $20 worth of Bitcoins everyday for about a week through the app without any issues. I made my purchase and ran into an error. I basically got my Bitcoins, but wasn't able to transfer them. I sent their support an e-mail and got a reply today. This was the reply: http://imgur.com/COihZNe

I sent them a reply asking for a refund and letting them know that I would be filing a chargeback and contacting Apple to let them know that the developers of an app on the App Store were requesting their customers to give them their iCloud credentials. After I sent this e-mail, they quickly said I could install a beta version of their app and that they would have given me a refund if I did not threaten them.
Again, in my dealings with them they had been great until today. I even told them in my e-mail that I'd like to continue using their app, until they asked for my iCloud credentials.

It sucks, because they really were a great service. I just no longer feel comfortable using their app anymore.