The owner of an innovative electric bicycle company in the U.K. is reeling from Barclays and HSBC’s sudden and unilateral decision to freeze three accounts in connection with cryptocurrency trading. Scott Snaith had two personal and one business account frozen after he exchanged Bitcoin for cash with verified U.K. account holders. Those exchanges, which Snaith said were transparent and legal five-figure transactions, triggered the decision. And now, Snaith is accusing the firms of financial discrimination and failing to keep up with customers’ habits.
Cryptocurrency-Earning eBike Maker Frozen Out Over Bitcoin
One of the accounts Barclays froze belongs to Snaith’s business 50cycles. 50cycles sells an electric bicycle called the Toba, which earns riders cryptocurrency as they pedal it. Ride the Toba, and the bike generates tokens the rider can trade for Bitcoin and other currencies.
But that business is now in total chaos, according to Snaith. Unable to access the funds in his business account or personal accounts, he was unable to cover business expenses, including paying his employees. As a result, one employee resigned.
And all because the word “Bitcoin” appeared in one of Snaith’s account ledgers, the e-bike entrepreneur said in a statement. Snaith says there’s absolutely nothing unlawful about the transactions. He even escrowed all the funds involved in the transactions through an independent and licensed third party.
In light of Snaith’s formal complaint, which he had to issue through the Financial Ombudsman, HSBC reinstated one account. Barclays, for its part, has refused to offer Snaith an explanation, except to say that they are complying with regulations and don’t take such decisions lightly.
Banks Jump The Gun Over Fraud Fears
Major financial institutions often cite concerns about money laundering through cryptocurrency as a reason for restricting access to crypto exchanges. Some, however, are coming around to the cryptocurrency phenomenon, mostly at the behest of their clients. And that’s what makes Scott Snaith’s predicament so confusing.
Barclays, the bank that refused to unfreeze Snaith’s accounts, has a partnership with Coinbase, one of the largest and most popular cryptocurrency exchanges. And the main goal of that partnership was to make it easier for British customers to withdraw and deposit funds with Coinbase. In other words, exactly what Snaith was penalized for doing.
Hence the pointed words Snaith had for Barclays, with whom he vows never again to do business. “The banks are deliberately creating obstacles. They are anti-digital currency and displaying a new form of financial discrimination.”
For Snaith, that means just one thing: “your funds are not yours,” he said.
Avoid Having Your Funds Frozen
If you’re in the U.K. and want to be able to exchange cryptocurrency for fiat cash, picking the right exchange matters. If an exchange uses a bank account that’s offshore, U.K institutions are very likely to flag it as a fraud concern. This is especially true if there are multiple transactions a day or large amounts involved, like Snaith’s five-figure transactions.
Speak to your bank first before connecting a cryptocurrency trading platform to your account. And look for exchanges that are transparent and secure, and that maintain on-shore accounts. Canada recently experenced a $28 million cryptocurrency freeze, as well.