Fancy Exchanging Paypal for Other Digital Currencies? Don’t
Many times I’ve seen people asking in HYIP related forums on whether they could fund their digital gold currencies (DGCs) like E-gold or E-bullion with Paypal, since they want to save the hassle of going through their exchanger.
From my understanding, people just want to just use their credit card to fund the DGC accounts but couldn’t find the option to do so. Some DGC exchangers do allow credit card transactions, but because of the risk they’re taking, they’ll charge hefty premiums for accepting your business.
Now since Paypal accounts allows you to fund your account via credit card, many people will just fund it and exchange with someone for DGC units. My advice (as alongside with most that knows this fact) is not to do it even with any other digital currency available.
I’ve went through the Terms and Services of Paypal and don’t really find anything concrete to support this fact. The closest I can get was this clause that allows them to shut your account,
‘The account has been used in or to facilitate fraudulent activity;’
I don’t see how fraudulent can that be though.
There are numerous cases that I’ve known that Paypal freezes account pretty often on suspecting accounts that deals with money exchanging transactions. My friend Leo was one of them, and it wasn’t even on purpose. He wanted to purchase a service which only accepts E-gold and did two transactions with the Paypal account for the exchange, but his account was froze for almost half a year before Paypal decides to release it back to him.
Let’s see if we can get any explanations from any of their staff to this entry.
So Never Use Any Exchanging Service for Paypal to Anything Else
Never use any exchange services from Paypal to any other forms of digital money unless you don’t mind taking the risk of them freezing your money for months.
Established exchangers don’t do Paypal because Paypal does not allow any other agents apart from themselves. You can see people on many other forums providing such service from time to time; Use them at your own risk.
ps. Merry Christmas to All Digital Money World Readers! ;)
PayPal is the payment processor everyone loves to hate, largely because of their intrusive policies like the one described in this post. Why should PayPal care what the purpose of the payment is (unless it’s obviously illicit)? After all, your bank doesn’t snoop into what it is you’re purchasing when you send a check to someone.
Some people say that PayPal is trying to prevent its competitors from gaining a toehold in the payment processing business. Well, maybe. I think the real reason lies elsewhere.
The Feds have spent decades stamping out any form of anonymous bank account, and have pretty much succeeded. They’ve also made it very difficult to transmit money (other than very small amounts) anonymously. They’ve done this through strict regulation of the banking and money transmitting industries.
When PayPal was in its infancy, it got a lot of heat from the Feds because it was creating a new business model: money transfer anywhere in the world at the click of a mouse. PayPal found a way to stay within the bounds of legality, but I’m sure the Feds still watch them like a hawk.
Technically, organizations like e-gold are perfectly legal. They can allow anonymous accounts, and move money between accounts, with impunity because they’re outside U.S. jurisdiction. E-currency exchangers operating inside the U.S. (the folks who buy and sell e-gold for a fee) don’t fall under the regulations regarding “money transmitters” because they don’t “transmit” or move money. All they do is buy and sell e-gold, just as a coin dealer buys and sells physical gold.
Nonetheless, the combination of an offshore e-currency that can be moved between (anonymous) accounts anywhere in the world at the click of a mouse, and an unregulated, uncontrollable, undocumented world of “exchangers” both inside and outside the U.S. is the Feds’ worst nightmare. Working together, the exchangers and the offshore platform have essentially created a system for investing and transferring funds anonymously. No wonder the Feds hate digital currencies and want to destroy them even though they’re not illegal.
That both e-gold and the Liberty Dollar are under indictment tells you something. I’m sure the Feds have worked hard to build a case against them. Pecunix, Liberty Reserve, and the others will probably be next. The last thing PayPal wants is any involvement with digital currencies, or they may be “implicated” in one sting or another, and go down. So PayPal simply bans any users who try to buy or sell digital currency. The loss to PayPal is negligent, but they are “playing it safe.” And, in the process, making it more difficult for potential competitors to do business.