Despite earning high profits from the sales of its popular pentesting tool, the Flipper Zero manufacturer is, for the time being, not getting any of the money earned through the online payment system PayPal (NASDAQ:Ā PYPL), although things started out fine.
Specifically, after Flipper Devicesā PayPal account started to receive higher profits from the sales of Flipper Zero, the payment processing company put these funds on hold, leading up to around $1.3 million in inaccessible profit for the manufacturer,Ā Daily DotĀ reportedĀ on September 12.
On September 6, the company took to Twitter toĀ expressĀ its frustrations:
Notably, Flipper Zero is an open-source multi-tool device that can be used for āhacking digital stuff, such as radio protocols, access control systems, hardware and moreā although Alex Kulagin, the chief operating officer at Flipper Devices denies it can be used to commit crimes.
Things turn sour as profits rise
According to Kulagin, everything went smoothly at the beginning. However, as sales of Flipper Zero took off, the troubles began, and PayPal withheld $700,000 earned over 24 hours. As Kulagin explained:
āThey gave access to part of the funds (we had $26,400) and [said they would] release the rest once you provide tracking numbers [which happens automatically through Shopify integration]. We didnāt worry much at that point.ā
After providing the numbers, these funds were released but were again withheld by a request for detailed information such as the companyās bank statements, beneficiariesā information, ID proof, proof of goods purchase, and proof of fulfillment for ten random orders.Ā
Kulagin said that āthis time everything was on hold and we couldnāt do anything but receive the payments from customers. (ā¦) Weāve submitted everything theyāve asked, but they kept rejecting it for different reasons. First, they didnāt like the proof of address, then proof of goods purchase, et cetera.ā
No news on releasing the funds
By the time the company stopped offering PayPal checkouts, $1.3 million in cash had been withheld by the payment processor over the missing proof of delivery with the deadline of August 27, which had since passed, and according to Kulagin, on August 30:
āI found out that our account is fully blocked, [and] money will be on hold for 180 days with no clear explanation why, only: āYour accountās inconsistent with our User Agreement.āā
Meanwhile, a spokesperson for PayPal, which has recordedĀ increased stock price and activist interestĀ in recent months, said that the ādecision on account holds, limitations or other actions may be based on the management of risk, in order to protect both buyers and sellers.ā
Apparently, PayPal has a history of withholding funds from pentesting tool sales. Eight months before, European RFID and pentesting hardware providerĀ Lab401Ā complainedĀ of āa personalised, manually executed war of attrition against our company and shareholders.ā