The final step PayPal requires to remove account limitation is to provide proof of postage. Bitcoin didn't need posting so I called them.
The call centre is in Ireland. After explaining to the man in the call centre that I used it to trade bitcoin and thus was unable to provide proof of postage.
He said he would update the system and the limitation should be removed within 24 hours.
Less than 24 minutes later I received this email from PayPal:
Dear Marc,
We regret to inform you that we’re initiating the closure of your PayPal account because of certain activity that took place relating to your account. This measure is necessary to protect us from potential financial losses.
Your right to appeal:
We always perform a thorough investigation before deciding to initiate the closure of an account. However, we appreciate that from time to time misunderstandings can happen. If you wish, you can appeal our decision. Just get in touch with us and let us know. You can do so by logging in to your PayPal account at www.paypal.co.uk and clicking 'Contact Us' at the bottom of any PayPal page.
Your account balance during the account closure period:
This decision means we must oversee the appropriate movement of any money currently in your account. A gradual approach to account closure allows us to part ways, while considering any liabilities that may arise. Our aim is to review any valid buyer claims lodged against you. We must allow enough time for claims to be filed as these can take several months to be reported and resolved.
How will the process work?
We’ll hold any money currently in your account in accordance with section 2 below. We do this because it provides sufficient time for most claims, such as chargebacks, to be filed by other parties. These claims can result in financial loss. If your account balance is below zero, you’ll have to settle the amount owing on your account to avoid further action.
Our first review at 30 days from the date of this email will calculate our exposure and we’ll release any excess funds to you at that time for withdrawal. We’ll communicate this to you at the time. This review can result in 3 different outcomes as detailed in sub-sections 2(1)-(3) below. We’ll always communicate the outcome of our reviews to you.
We’ll release your entire remaining balance to you for withdrawal. Please note that if you choose not to withdraw the money at that point we reserve the right to re-coup any money at the next review; or
We’ll release a part of your remaining balance to you. If this is the case we’ll inform you about how much money can be withdrawn. We’ll then conduct another review 30 days later that will repeat the process detailed under section 2; or
We won’t release any funds to you if we deem our exposure to be greater than or equal to your available balance.
Your account may be reviewed up to 5 times; at 30 day intervals until day 180 from the date of this email. If any money remains in your account at day 180 it will be made available for withdrawal at that point.
Accounts with a balance owing to PayPal:
If your account shows an amount owing to us, you must add funds to ensure that the balance returns to zero. Please note that we reserve the right to recover the amount by legal means.
A copy of our User Agreement can be found by clicking ‘Legal Agreements’ at the bottom of any PayPal page. Our right to close your PayPal account, and the retention of funds, are covered in our User Agreement under sections 10.2 and 10.3.
Sincerely,
PayPal Account Review Department
Login to the PayPal account and see this:
You can't use PayPal anymore
At PayPal, we value a safe community in which all our customers can do business. We noticed activity on your account that’s inconsistent with our User Agreement and can no longer offer you PayPal services.
Any bank account or credit card details linked to your PayPal account cannot be removed nor can it be used to create a new account. You can still log in and see your account information but you can’t send or receive money. Any money in your balance will be held for 180 days, at which point we’ll send you an email with instructions about transferring your money.
The balance of the PayPal account will be released to me after 180 days. And if I want it paid by cheque a fee of $1.50 will be deducted.
Thank god for bitcoin.