The dangers of buying bitcoin thru Paypal - real life example

[cryptomaniac_xxx]

According to this reddit post by u/TheCoolDoc, his account gets banned by Paypal and then limited because of too much activity, buying/selling bitcoin in a week.

I let your read the rest of the story.

In any case though be reminded, "Not your keys, not your coins". So anytime this centralised services can either ban you or selectively close your account, and not good if you have some funds on it.

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[n0ne]

PayPal being centralized and profit focused, buying/selling of bitcoin will be limited. Because, when the market bounce beyond the prediction the profit is enjoyed by the users and not the company itself. This is where paypal makes buying/selling bitcoin through them a dangerous task. The usage of bitcoin keeps increasing with the integration of buying/selling through PayPal, but it isn't quite safe as that we use through reputed exchanges.

[milani]

what did you expect?

To my mind lots of people after the announcement about PayPal and crypto hoped to get the real adoption of crypto currencies by this services and just forgot what the monster is hidden behind this process. People just thought positively about this proccess and thought that finally it had happened and such famous system with strict ruless of using might really allow people to use their crypto assets in a really suitable way. But personally I have a very realistic attitude to such kind services. And Ithink that people should first try to learn in deep the history of the service and do not forget the policy of the company to its users in previous years, it always shows what the nuances may be in future. But I do not think that person that wrote the article is silly. He just believed them, and forgot a little about the reality.

[omone1]

I am always scared of such centralized system that could censor or ban your account at will, although it's part of adoption the integration of bitcoin in Paypal, which is necessary for Paypal to staying relevant in the future. For now, I will keep using platforms that work for me in bitcoin transactions.

[ReiMomo]

Definitely, PayPal is not a trading platform it will just give you a headache if you use it for your trading activities, this is the negative impact to the crypto holders that after celebration when PayPal acquires bitcoin to their services which had brought good effect on mass adoption.

Though PayPal offers services for bitcoins through their platform it is still a centralized financial company that abides by regulations from the government. Bitcoin traders, I guess should not use it anymore for trading however we may still consider PayPal for other exchanges like online purchases besides PayPal has given us a great contribution to the global adoption that we are aiming for.

[Oshosondy]

While using fiats on PayPal, they do ban people, that is why some people still like to use alternatives like Payeer and Skrill. But custodial services should be regarded as nothing more than custodial services, they will only tell someone that he/she has the full control of his coins but just a pure lie. I did not see it surprising that PayPal could do such a thing because it is not new, there will still be many of this that will still happen. And with all these, people still like to make use of such services while they can hold their coins for themselves.

[Cryptogainz]

I?ve heard PayPal at some point next year will allow the withdrawal of Bitcoin to your own wallets.

[dothebeats]

This is what people would get without reading T&Cs on such big services like PayPal. They can literally do this even if what you're doing is practically and essentially legal, unless they deem it not so. PayPal's bitcoin offerings is not meant to be an exchange platform wherein a user can buy and sell bitcoin almost every minute whenever their positions are already profiting. They just like you to give them money to give you some virtual bitcoin ownership, since you can't really withdraw it out of the platform in the first place. It's kinda cheating since you can't really use it anywhere else--only on PayPal, which sucks.

Perhaps this should be a warning to people that wanted to do some form of trading activity on the said platform. It isn't designed for such, and account suspension might even entail if you do these things similar to what the user did.

[Twentyonepaylots]

Forget about "Not your keys, not your coins", they don't even let their user make profit from buy/sell Bitcoin. PayPal should emphasize that their platform aren't mean to be trading/exchange where user can buy/sell Bitcoin regularly.

It's really funny how they wanted bitcoin and not buying and selling lol and I agree they should emphasize it at first coz people are naturally into profit with cryptocurrencies. If they continue to suspend people from doing so, then I see nothing for paypal to be with any crypto, they need to stop. Now I can't stop thinking how many companies will be like this in the future 

[Twinkledoe]

I must admit that I am still amazed that some people are still using Paypal in 2020.

At some point, you can't avoid using their services. Even me, I am still using it because a lot of merchants are using the PayPal so you have no choice but use their platform. But when it comes to crypto services, I believe most forum users will not use their platform to buy/sell crypto. There are a lot of exchanges which are way better than PayPal in terms of rates offering. Most newbies in crypto will use their services but when they learned more about crypto, I don't think they will stay in PayPal when it comes to crypto transactions. So I guess, PayPal is a good introduction to crypto for its millions of users.

[MusaMohamed]

"Not your keys not your coins" is used for private keys. On Paypal, people even don't have a touch on their public keys. What a shame on Paypal and how naive people are to simply believe in Paypal.

The feature to get bitcoin on Paypal is bad: you don't control your private key and you don't have any touch on your public key. They are playing as a middle service and is worse than other crypto exchanges. At least on crypto exchanges, you have touch on your bitcoin public keys.

[Lorence.xD]

Forget about "Not your keys, not your coins", they don't even let their user make profit from buy/sell Bitcoin. PayPal should emphasize that their platform aren't mean to be trading/exchange where user can buy/sell Bitcoin regularly.

Exactly, in my opinion both parties involved is at fault in the story, Paypal being the biggest participant in the problem. I do not know the full story but shouldn't the user knew that in the first place, there should be a clause there that says that they can't treat the platform as a trading platform and if there is none that can help deter users to do trading then the fault is all in Paypal's hands. In the defense I guess of Paypal, I think that they are just preventing possibilities of money laundering.

[L A R A]

PayPal is not a trading platform for Bitcoin. He only facilitates us to make it easier to buy Bitcoin using a PayPal balance or credit card.
If we have already bought it we are not advised to hold it there, better withdraw it directly to a personal wallet.

[Wexnident]

There's already a thread about this if anyone is curious
https://bitcointalk.org/index.php?topic=5293387.msg55685306#msg55685306
Anw, my take here is that the man in question seemed to have used Paypal itself as an exchange, with the repeated buys/sells over the weeks continuously. Though the idea stands of the not your keys not your coins kind of thing, it isn't the main issue imo, not that I know what Paypal actually wanted it to be, since given the current example, it doesn't look like it looks favorable to it being used as an exchange. If so, what exactly is the use of the feature they have to buy and sell crypto no?

[meanwords]

The interesting part is

No appeals. No explanation. No consideration that their reviewer may be an ignorant 60 year old with no knowledge of PayPal's own crypto service. Whenever I've called their support about PayPal Crypto in the past they had no idea what I was talking about (even after weeks after release).

This kind of shows that Paypal really isn't much interested in Bitcoin at all and just integrated fake Bitcoin just for show. I don't know why they did this but at least the user got his account back. But still, it just suck that Paypal doesn't want to do anything unless they were being exposed.

PayPal is not a trading platform for Bitcoin. He only facilitates us to make it easier to buy Bitcoin using a PayPal balance or credit card.
If we have already bought it we are not advised to hold it there, better withdraw it directly to a personal wallet.

But the thing here is that, they don't want to let people withdraw their crypto from paypal so all you can do is either hold Bitcoin in paypal wallet or trade there which this user did and turned out to be a really bad situation.

[mnporter2001]

According to this reddit post by u/TheCoolDoc, his account gets banned by Paypal and then limited because of too much activity, buying/selling bitcoin in a week.

I let your read the rest of the story.

In any case though be reminded, "Not your keys, not your coins". So anytime this centralised services can either ban you or selectively close your account, and not good if you have some funds on it.

This is the biggest weakness of centralized platforms. They all hold all the keys and power, when we use their services they can do anything to limit you. And of course, we won't be able to do anything to them because we have to obey their rules.
That's why I always remind people to split money to stay in many different exchanges in order to have a problem, we still have money to manage the costs around.
Although they have the advantage of reputation, they also offer strict rules, so please read the rules carefully before using them.

[Akiko]

I?ve heard PayPal at some point next year will allow the withdrawal of Bitcoin to your own wallets.

If it's true then drop the link so we can read it .

PayPal is not a trading platform for Bitcoin. He only facilitates us to make it easier to buy Bitcoin using a PayPal balance or credit card.
If we have already bought it we are not advised to hold it there, better withdraw it directly to a personal wallet.

Indeed they are not exchange platform so why waste your time using it if you know they only have that option to earn from its users.  use an exchange platform to convert Your crypto not PayPal you may lessen  transaction fees.

[zeingrind777]

That's why I don't trust PayPal when it comes to cryptocurrency. Storing bitcoin using PayPal services is a very big risk. Because the private key is only controlled by them.

[Rengga Jati]

In any case though be reminded, "Not your keys, not your coins". So anytime this centralised services can either ban you or selectively close your account, and not good if you have some funds on it.

I already read about it and wait for the conference or confirmation from PayPal because we don't really know the exact problems or there may be any other problems.
But in PayPal itself, we don't only have that key, but also we cannot withdraw the funds in cryptocurrency. The feature is still not available to withdraw our crypto there. So, it means that if we want to move the crypto, we must change it into Paypal again or other fiat currencies. Well, lets; see how the development and progress of this PayPal later

[lovesmayfamilis]

PayPal is not a trading platform for Bitcoin. He only facilitates us to make it easier to buy Bitcoin using a PayPal balance or credit card.
If we have already bought it we are not advised to hold it there, better withdraw it directly to a personal wallet.

How well said. Who does NOT recommend? Have you read the PayPal news? Or are you just in a hurry to fill the subscription quota with your publications? I recommend that you get a little interested and read about what is happening around you.
For your information, if you buy bitcoins through PayPal, there is nothing you can do about it. Impossible to withdraw to another wallet as you advise. The only thing you can do with your coins is to buy goods from online stores or leave Bitcoin on hold, which is also dangerous. Because PayPal is famous for its frequent blocking of accounts. Not to mention the fact that you provide all documents for maximum "anonymity".

[ABCbits]

In the defense I guess of Paypal, I think that they are just preventing possibilities of money laundering.

If you read the reddit post carefully, u/TheCoolDoc never withdraw the Bitcoin (PayPal don't allow their users to do so anyway) and he buy/sell Bitcoin with PayPal.
So obviously there's no money laundering.

[daarul50]

In the defense I guess of Paypal, I think that they are just preventing possibilities of money laundering.

If you read the reddit post carefully, u/TheCoolDoc never withdraw the Bitcoin (PayPal don't allow their users to do so anyway) and he buy/sell Bitcoin with PayPal.
So obviously there's no money laundering.

True, they are fooling innocent people but unluckily they faced a crypto enthusiast that know things quite well about crypto.
Cannot imagine if regular guy treated like this , they might accept whatever their decision , crazy.
The service is broken since the beginning launched , nothing you can expect from paypal crypto.
The paypal employee that taking this case are completely ignorant , i can imagine how frustrated he is.

[kayvie]

This is the reason why I never intended to use Paypal to buy bitcoin. They don't actually mean to let their users to buy and sell bitcoins. They just want to make money for themselves and control the activity of their users. They have more strict rules than any other wallet. This is the reason why I don't like to use this centralized wallet.

[Vishnu.Reang]

If you read the reddit post carefully, u/TheCoolDoc never withdraw the Bitcoin (PayPal don't allow their users to do so anyway) and he buy/sell Bitcoin with PayPal.
So obviously there's no money laundering.

It is not that simple. PayPal still have a clause, which states that PayPal accounts can't be used for purchasing cryptocurrency from peer-to-peer platforms. I guess they haven't changed this rule, despite integrating Bitcoin to their platform. Anyway, millions of PayPal users have invested in Bitcoin during the last few weeks. Let's wait and watch whether other users are facing any issue.

I have a feeling that there is something fishy here and the user is not being 100% honest.

[Broly46]

Meh, this remind me of bithumb, I didn’t know PayPal could go this low because bithumb has banned my account for over three years just because I signed up a user and send some fund and being a loyal user for just less than 2 months, that’s also come with spam email and kyc crap and threatening letter from them from time to time, absolutely horror story to tell my little nieces.

[zeingrind777]

This is the reason why I never intended to use Paypal to buy bitcoin. They don't actually mean to let their users to buy and sell bitcoins. They just want to make money for themselves and control the activity of their users. They have more strict rules than any other wallet. This is the reason why I don't like to use this centralized wallet.

It is true. If we want to buy and sell bitcoin with a centralized platform, we should choose purchases that have a high rating such as Binance or Coinbase. Although it is not necessary to believe completely, at least both of them are more recommended than the other.

[Asuspawer09]

According to this reddit post by u/TheCoolDoc, his account gets banned by Paypal and then limited because of too much activity, buying/selling bitcoin in a week.

I let your read the rest of the story.

In any case though be reminded, "Not your keys, not your coins". So anytime this centralised services can either ban you or selectively close your account, and not good if you have some funds on it.

This is a big disadvantage of using a custodial wallet like Paypal and at the same time Paypal was just getting started in crypto so maybe they don't know what to do if their users are buying and selling crypto means Paypal is possibly losing profit here.

In my experience in using a custodial wallet, I mean it's not really that bad as long as you do KYC and everything it's very unlikely to encounter any issue when it comes to your account but still, the possibility of freezing your account is always there.

Most of the custodial wallet does this thing when the market price of bitcoin is pumping they are limiting the transaction because it just means they could lose profit here which is really a bad thing for us and makes you feel that you don't have control to your own wallet. It also happened to me in a different custodial wallet they disable to sell your bitcoin when the market price is so high.

[zasad@]

I am ready to say thank you to this company for promoting Bitcoin to the whole world. But I do not recommend using their services to buy cryptocurrencies.
Users need to read a lot of small print in their user agreements.
It is sad that many people will get the first negative experience when using large custodial services.

[yhiaali3]

This is what I said when I heard Paypal accepting bitcoins within the payment services, it is absolutely correct to say: You do not have your private keys = You do not own your currencies, Paypal does not allow you to own your private keys and this means that you do not in fact have your currencies and you can be banned or your money seized in any time.
Personally, I had a bad past experience with PayPal before it allowed Bitcoin to be used. They suddenly blocked my account and I couldn't use my money and I think this is the same situation that hasn't changed after using Bitcoin.

[error08]

They don't know how things work in the crypto-world, Paypal should hire some people who understand how to manage the business 'buy and sell crypto'.
If they don't want all of the hassle to handle buy at a lower price and sell at a higher price, they should announce that people are not allowed to trade, but to spend crypto on the merchants.

[bekti3]

therefore, I thought of doing transactions on the exchange only. other than that it minimizes the unexpected. Paypal is still very inefficient. In addition, many people have experienced things like their accounts being washed for no apparent reason. for me personally this is a very disturbing thing ..

I think it's better to let PayPal run its transaction system for a year, to find out how good PayPal is in terms of service and security that guarantees investors ..

[Kakmakr]

In the defense I guess of Paypal, I think that they are just preventing possibilities of money laundering.

If you read the reddit post carefully, u/TheCoolDoc never withdraw the Bitcoin (PayPal don't allow their users to do so anyway) and he buy/sell Bitcoin with PayPal.
So obviously there's no money laundering.

That is why this is making no sense... Why create a service for people to buy & sell bitcoins and not allow them to trade with it? I think their operating license does not allow them to be a financial service that offers trading .... but rather to be a payment processor. So if people use it as an exchange... they might get into regulatory trouble.  

The question is ... How do they make money... if they do it like that? (Not being a payment processor using bitcoins and also not being a trading platform?)

I think they buy low and then sell it at a premium price for a profit?

[Chris Barth]

I still don't understand why the adopted bitcoin... To make more money or what? I don't even know if to believe that the bitcoin in a user's account is real or some figures they are manipulating in their back-end database.

[Reid]

Thanks for the share.
That was hilarious and sad.

First, why is their customer support doesn't even know about the recent update. That's fucked up.
Is this really a business with an office or just a bunch of freelancers helping Paypal with a minimum wage? Maybe even lower.
Sad that he lost all his money because of the lack of knowledge of whoever conducting the review.
Okay, I am not trying this anymore. Maybe this could be a part of the reason Bitcoin price is going to hell again.

Suggestions:
Put a limit on how much bitcoin will be converted in a day or a month. Then refresh.

[ChiBitCTy]

I'm glad to see that someone has brought up some truth about paypal.  Yes the bull run up to 19k was in large part due to PayPal.  Yes apparently paypal is buying up 70% of new coins being produced on the market..but most importantly YES PayPal is a scumbag organization that lives to their or "moral code" just as Coinbase does.  PayPal first of all doesn't allow for sending or receiving bitcoin, which is half ass bull shit, but they will ban your account for anything they deem appropriate and don't necessarily have to tell you why.  PayPal has long been known to be a horribly corrupt company and as thankful as I am for them adding bitcoin to the platform..I know the truth about them and you all should too.

[Fesatmas]

PayPal is not a trading platform for Bitcoin. He only facilitates us to make it easier to buy Bitcoin using a PayPal balance or credit card.
If we have already bought it we are not advised to hold it there, better withdraw it directly to a personal wallet.

I agree with you, because if our bitcoins are left for too long, it will trigger an event where the account will be locked. I still don't really understand why there is some kind of account lockdown, if the reason is due to too much activity, in my opinion it's only natural. because in general, paypal is only limited to making it easier for us to buy bitcoin with a paypal balance.
so if the purchasing activity exceeds the maximum, then paypal will automatically detect transactions that are not fair.

For example, in one day paypal makes purchasing rules a maximum of 10x a day. if it exceeds 10x, paypal will lock and check the account. and reopen it when it is free from suspicious activity.

[coolcoinz]

I just spent 40 minutes on the phone with a nice lady (Jennifer) on PayPal's phone and went through our transaction history/activity, tons of explanations of crypto terms (since she didn't know PayPal even has crypto) and I basically begged for the account back, but still no luck because apparently you cannot appeal a final reviewed decision.

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 daytrading like thing and even after that there's no appeal option (she tried) and its final.

This part is the most disturbing IMO. They have a support office where a group of people sits and answers tickets, right? When one person makes a decision, you can't appeal to a supervisor. Even when the decision is questioned by another employee on the same level, they can't do anything. That's crazy if you ask me. In big companies you have multiple supervisors within a group. There's a junior support, senior support, a manager and a ticket can be escalated.

[imstillthebest]

I still don't understand why the adopted bitcoin... To make more money or what? I don't even know if to believe that the bitcoin in a user's account is real or some figures they are manipulating in their back-end database.

they say that users cant withdrew thier btc inside thier paypal account and im also thinking that paypal doesnt really implement the whole crypto thing but like you said , it can only be figures and they do this to make more money .

the guys feedback can be a reference to us that plans to invest in crypto inside the paypal in the future if what to expect .

this was still early and paypal can change the way the work for once and for the sake of crypto .

[ReiMomo]

~snip~
this was still early and paypal can change the way the work for once and for the sake of crypto .

Yes, because PayPal helped us to achieve the global adoption but it may not be absolute yet however they still contributed a huge part to the adoption when they started accepting bitcoin in their services.

However, we barely knew that PayPal is a centralized financial platform and it abides by the regulations given to them by the state and for some reason, it is not only PayPal that is implementing such banning or locking an account due to high transaction rates made by the account holder.

Moreover, we cannot blame PayPal for this if this has been given to them by the authority which can help avoid Ponzi schemes or money laundering and can make the criminals fall back to the authority. It will be better if you want to trade better use other platforms that were designed for trading purposes.

[Chris Barth]

I still don't understand why the adopted bitcoin... To make more money or what? I don't even know if to believe that the bitcoin in a user's account is real or some figures they are manipulating in their back-end database.

they say that users cant withdrew thier btc inside thier paypal account and im also thinking that paypal doesnt really implement the whole crypto thing but like you said , it can only be figures and they do this to make more money .

the guys feedback can be a reference to us that plans to invest in crypto inside the paypal in the future if what to expect .

this was still early and paypal can change the way the work for once and for the sake of crypto .

Another way you could tell is the blockchain. If I send 1 BTC to you, it will show on blockchain that I actually had a balance of 1 BTC, and that I sent it to a wallet who now holds the 1 BTC. But PayPal's trasanctions can't be seen on blockchain (as they allegedly said).

[BuNga_cute]

Paypal will ban accounts that do too many Bitcoin transactions, because Paypal is not a place to trade. So buying Bitcoin on Paypal is
only for long-term investment, if we want to do short-term trading we can do it on the exchanges. Thank you opening post for sharing
information about Paypal regulations regarding Bitcoin transactions, this reminds us all to avoid Paypal for trading.

[khaled0111]

He did the right thing by writing about this incident and exposed them on different crypto-related websites. It seems that his efforts has finally payed off as Paypal decided to recover his account:

EDIT EDIT EDIT :

Got an email today that my account has recovered completely. I don't have 'Funds Now' anymore, but beggars can't be choosers.

Obviously, they didn't want to see the bad news to be spread few days after they launched this new service.
What shocked me the most is the incompetency and the level of ignorance of their customer support team!

[manfredmann]

Well if you are doing nothing then there will be no problem. Yes, centralized exchange and the paypal platform itself which relatively new to bitcoin can hold funds with their users or freeze it whenever it is suspected as doing illegal activities. Hence, if you are not doing something like illegal then there is nothing to worry. I myself had been using a centralized exchange over the years but have no experience in getting account freeze not unless I will do something that could violate their rules and regulations.

[Walterhank]

Thanks for the heads up. You have point there, we should be very careful with our funds as losing your keys means that you lost all of your assets.

[thesmallgod]

If they wont allow it why do they authenticate those transaction. If there is a limit to the numbers of transaction someone can perform in 24 hours, they should have put that. Even in many centralized exchange including binance, there is a limit to amount of withdrawal transaction you can do in a day. If you want to increase that, you will need to complete the KYC procedure. I believe maybe because they just start to allow this transaction, with time they will take care of such a thing. I can people writing about not your key not you coin, DEX also have their own limitation. He could not have made those transaction on DEX due to low liquidity. If you want to huge transaction, it is better to make use of centralized platform which he has used except for this limitation.

[adzino]

According to this reddit post by u/TheCoolDoc, his account gets banned by Paypal and then limited because of too much activity, buying/selling bitcoin in a week.

I let your read the rest of the story.

In any case though be reminded, "Not your keys, not your coins". So anytime this centralised services can either ban you or selectively close your account, and not good if you have some funds on it.

Not surprised at all. But looks like that guy was constantly selling and buying during dip and rise. I guess that is the reason why his account got banned, According to another user, he says that you are not allowed to use paypal as an exchange and trade over there to make profits. You were supposed to use paypal for buying and holding your coins. Not sure if they have those terms clearly mentioned on their site. Still a shit thing to lose your funds.

[fauzan123]

I still don't understand why the adopted bitcoin... To make more money or what? I don't even know if to believe that the bitcoin in a user's account is real or some figures they are manipulating in their back-end database.

they say that users cant withdrew thier btc inside thier paypal account and im also thinking that paypal doesnt really implement the whole crypto thing but like you said , it can only be figures and they do this to make more money .

the guys feedback can be a reference to us that plans to invest in crypto inside the paypal in the future if what to expect .

this was still early and paypal can change the way the work for once and for the sake of crypto .

Another way you could tell is the blockchain. If I send 1 BTC to you, it will show on blockchain that I actually had a balance of 1 BTC, and that I sent it to a wallet who now holds the 1 BTC. But PayPal's trasanctions can't be seen on blockchain (as they allegedly said).

Paypal legality can be a unit of reference where the thing not to send it is very minimal, because it relates to the reputation of paypal itself.

Indeed, many use such a system, some of the exchanges also do not show the transactions entered in detail. But overall we do need to be careful, because considering that Paypal is also just using a system with bitcoin support so it could be that the smallest things have errors it can get. Of course, we can see the proof that has happened to members who have bought bitcoin via paypal whether it is safe or classified as risky.