Bitcoin warning from angry e-bikes business owner after high street banks froze his accounts Scott Snaith, an electric bike retailer, said three accounts were blocked earlier this month, throwing his firm into “chaos”

An angry business owner is warning customers off using high street banks after his accounts were frozen without warning when he traded in cryptocurrency.

Scott Snaith, an electric bike retailer, said three accounts – two personal and one business account – were unceremoniously blocked earlier this month, throwing his firm into “chaos”.

Hours after trading Bitcoin for cash through a popular peer-to-peer trading platform – five-figure transactions he said were “entirely transparent and above board”, Mr Snaith discovered he could no longer access his HSBC and Barclays accounts. The people he traded with were UK account holders with verified IDs.

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The transaction took place through Mr Snaith’s personal account – but his linked business account was also then blocked. He said all receipts of his transactions went through “escrow” – where money is placed in the control of an independent and licensed third party in order to protect both the buyer and seller in a transaction – yet the banks offered no explanation for the account closures.

Mr Snaith, from Loughborough, Leicestershire, who owns the electric bike company 50cycles, said he is the victim of “financial discrimination” – despite the fact the e-bikes he sells generate their own cryptocurrency and are at the forefront of digital currency technology.

“My two personal bank accounts and business account were frozen for using a well known Bitcoin trading site,” he said. “No unlawful activity has taken place but just because the word ‘Bitcoin’ was mentioned my accounts were locked instantly. A ‘senior fraud advisor’ then closed my complaint off – leaving me with no choice but to take the issue to the Financial Ombudsman for appeal.”

Mr Snaith said the banks told him to go elsewhere, freezing all his funds, which meant he could not pay his staff or suppliers.

“This situation is a complete nightmare and the knock-on effects have been unbelievable. One of my staff left as they had just had a baby and couldn’t afford to be in a job that was unable to pay them, which isn’t surprising.”

U-turn

HSBC reinstated Mr Snaith’s account after he complained but Barclays has refused to do the same leaving him to seek legal advice.

Mr Snaith said: “I’ll never be able to bank with Barclays again. I’m a professional business owner taking advantage of new financial technologies and it looks like the banks are failing to keep up with their customers’ habits. We are the ones being punished. The banks are deliberately creating obstacles. They are anti digital currency and displaying a new form of financial discrimination. The message is clear: your funds are not yours.”

Mr Snaith said he was trading crypto as part of research and development on his own new product, a bike called TOBA, which generates crypto tokens for every mile pedalled. TOBA tokens can be exchanged on platforms such as Binance for Bitcoin or any of the other thousands of ‘altcoins’ available.

He said: “To me, this is a clear case of the high street banks abusing their power. It is not a criminal matter but a personal, corporate decision that someone has made. In my mind, that’s wholly wrong, and I am sure there are many other victims that are even less fortunate than myself.”

Andrew Hagger, a personal finance adviser who runs Moneycomms.co.uk, said whether someone has the bank accounts frozen will probably depend on the amount and frequency of transactions.

He said: ”However I think the biggest concern amongst some banks is that they may be seen to facilitate money laundering by allowing crypto transactions. It’s probably sensible to speak to your bank first before trading to see what their position is and whether they have any specific rules or transaction limits.

“It may also be worth keeping your crypto trading monies in a totally separate bank so if the account is frozen for any reason it doesn’t impact your day to day finances.”

Experts said more and more Britons using cryptocrrency could be caught up in similar situations, due to a lack of transparency.

Commonplace

Benjamin Dives, Founder and CEO of London Block Exchange, said: “For those who are using cryptocurrency exchanges with a non-UK onshore banking account, it is unfortunately commonplace for banks to freeze accounts that trade cryptocurrency and hold funds.

“Unfortunately many exchanges are not transparent about this with their customers, which is why we urge cryptocurrency traders to carefully select an exchange that uses a UK onshore account – London Block Exchange are proud to offer this.”

Ironically, in March this year leading cryptocurrency exchange ‘Coinbase’ announced they had obtained a bank account with Barclays – the first agreement reached between a leading UK bank and a cryptocurrency exchange.

The UK chief executive of Coinbase, Zeeshan Feroz, stated: “Having domestic [sterling] payments with Barclays reduces the cost, improves the customer experience…and makes the transaction faster. We believe that this is an important step towards our commitment to making cryptocurrency accessible to everyone.”

A spokesman from Barclays told i: “Barclays is complying with its legal and regulatory obligations and we never take the decision to issue a notice of closure, or end a client relationship, lightly.”