PayPal has frozen a account so CoinPal won't continue as we know it. My funds (only about $5k) are tied up there for the next 180 days. Read the huge wall of text below for all the details History and details about the freeze When I started coding CoinPal back in December 2010, I emailed compliance*paypal*c*m asking for permission to sell Bitcoins using PayPal. I also emailed aupviolations*paypal*c*m seeking clarification on whether selling Bitcoins met their definition of "currency exchange". After about two weeks, I received no response to either email. I decided to start operating the site, thinking they wanted to see something working before spending time on a response. After operating for two months, PayPal's anti-fraud department called me to discuss some earlier chargebacks. We spoke for 20 minutes and PayPal told me it was fine to sell Bitcoins as long as I kept chargebacks low. Two months after that, PayPal placed a 5% reserve on my account. I spoke with the high-risk goods department on the phone a few days later. They were fine with me continuing business as long as I had a reserve on the account to cover any chargebacks that might arise. Today PayPal called to say they were freezing my account because they consider Bitcoins an "ecurrency". I told them that they had given me permission on two separate occasions to sell Bitcoins. They responded, "that department isn't authorized to make those decisions." The official statement in my account says "This limitation cannot be appealed." During the entire time I operated CoinPal, my fraud rate was 1.5% That includes the first wave of fraud when I was still learning how the scammers operated. If that first weekend is excluded, my fraud rate was 0.9% I obviously honored my end of the arrangement. CoinPal was a success During the four months that CoinPal operated, it helped introduce Bitcoin to 1,484 people by distributing 60,858 BTC (not counting MoneyPak trades). It also helped 76 people bootstrap their OTC ratings. My personal view is that PayPal freezing my account is a coming of age for Bitcoin. Previous PayPal account freezes in the Bitcoin community were related to chargeback volume. That was obviously not the problem here. Someone inside PayPal specifically decided that Bitcoin was a big enough risk that it should be prohibited. I see no greater compliment to a Hydra than cutting off one of her heads CoinPal's future I'm not entirely sure what CoinPal's future will be. I have a nice long train ride from Denver to San Francisco next week (on my way to Google IO) which should give me plenty of time to consider. I've thought of selling Bitcoins for Dwolla, but it sounds like Mt Gox has that under control. I'd consider selling/donating the CoinPal source code but PayPal will certainly shutdown any official sucessor now that they've decided that Bitcoins are "ecurrency". The fraud detection code is probably the most valuable component. Perhaps I can leverage that in some way to help Bitcoin succeed. I can't open source the anti-fraud code since most anti-fraud measures are "security through obscurity". Of course, I'm open to any suggestions on CoinPal's future. CoinCard will be easier to bring back, minus PayPal payments. It only needs a debit card number to operate. A possible PayPal freeze was one reason I focused on "gift cards" rather than PayPal exclusively. This whole situation has reminded me once again why distributed, resilient systems like Bitcoin and OTC are so important.