Anyone who’s contemplating day trading crypto on their PayPal account may want to reconsider, as such an action could lead to a permanent ban.
One user who was taking advantage of PayPal’s zero crypto fees to day trade over $10,000, has had his account balance placed on a six-month hold.
$462 Balance Placed in 180-Day Hold by PayPal
In a Reddit thread posted on Nov. 25, a Redditor with the moniker “TheCoolDoc” revealed that PayPal has permanently banned his account for day trading crypto. According to the post, PayPal’s system flagged his frequent cryptocurrency buying and selling as “item sales.”
After a flurry of speculation about possible involvement in the crypto space, PayPal finally boarded the cryptocurrency train back in October. Indeed, as previously reported by BeInCrypto, its massive bitcoin (BTC) buying activity appears to be contributing to the current scarce BTC narrative.
PayPal’s ultimate Bitcoin adoption endgame is for its users to utilize crypto as a funding source for online purchases across the platform’s 28 million merchants. Thus, its cryptocurrency adventure makes the service more like a virtual currency purse than an actual exchange.
With a zero fee regime in place until 2021, PayPal is effectively bearing the transaction costs for each crypto purchase and sale. That’s significant because TheCoolDoc, who day traded to the tune of $10,000 in a week, likely placed a heavy burden on the platform to cover those transaction costs.
As part of the actions taken against the Redditor, PayPal reportedly locked the account. According to TheCoolDoc, the banned account still has a $462 balance which is now on a 180-day hold.
Ignorance aside, TheCoolDoc’s dilemma highlights some teething problems that PayPal might need to solve. According to the Reddit post, the platform’s customer service leaves much to be desired.
In the fast-paced crypto world, a swift and adequate response to complaints could make or break any service that deals in cryptocurrencies. For the time being, it may seem best to ignore the temptation of high-frequency trading via PayPal.