Any service which allows purchasing Bitcoins with Paypal should immediately throw up a huge red flag. It's a sure sign that the people starting the service don't know what they are doing. You can't build a service where you allow people to purchase an e-currency with Paypal. Not only will Paypal shut down your account (Paypal doesn't allow trading of e-currencies,) but you will get hit with a mass of fraudulent purchases.<p>Any service which allows purchasing Bitcoins with Paypal should immediately throw up a huge red flag. It's a sure sign that the people starting the service don't know what they are doing. You can't build a service where you allow people to purchase an e-currency with Paypal. Not only will Paypal shut down your account (Paypal doesn't allow trading of e-currencies,) but you will get hit with a mass of fraudulent purchases.<p>ETA<p>The opposite direction (cashing in Bitcoins for Paypal) is a bit of a different story. It still violates Paypal's policy but it's less risky for everyone if the service is trustworthy. The biggest risk for the receiver is probably that the exchange Paypal account gets shut down and the service falls short on funds for returning money and / or can't withstand having funds locked up in Paypal.Another risk is that doing a lot of Paypal transactions with a Bitcoin exchange service might put you on Paypal's radar.<p>If all these issues don't make this a bad idea, then the high fees involved will probably scare you away.<p>Note that Bitinstant offers cashing in Bitcoins for Paypal but not the other way around.