I made $200K and PayPal locked my account

i've no idea. But wish u good luck

I was an F-1 student too, and here's my suggestion:

This coming Summer, apply for pre-completion OPT.

You are allowed to start a company (register a corporation), and work for it under OPT status. I have inquired about this on HN before: https://news.ycombinator.com/item?id=1523021 I also verified with the DSOs (Designated School Officials) at my university, who are authorized to give legal advice on this matter, and they said that it was indeed possible to be self-employed / do a startup while on OPT.

What you should do is:

1. Apply for pre-completion OPT right away. Once you get your EAD (it'll have a start date on it), register for a C-Corporation after the start date. (Unfortunately, non-citizens cannot start S-Corps, which are actually more suited to startups).

2. Then get a bank account on the company's name; link that account to your PayPal account, and cash the money to the company's bank account. You can then pay yourself a lump-some "salary" or cash it out via stock dividends.

3. Since your pre-completion OPT is authorized only for the summer, you'll have to stop "working for your company" at the end of the OPT period. So that this doesn't bite you again, in the meanwhile you should find a different solution to charging customers such as an international PayPal account or some other payment solution that is not based in the US.

4. Once you graduate, you'll be able to work for you company for atleast 12 months; and if you have a STEM degree (Comp Sci counts as one), you can work for it for an additional 17 months (adding up to a total of 29 months). After that there really aren't any other visas for startups / being self-employed, as the H1B requires that you own less than 50% of the company employing you (the real issue is that "you are not in control of your employment" and that you're fireable -- so even substantial ownership under 50% might be problematic -- but IANAL and I don't know about this. It might indeed be possible to do a startup on an H1B with 3 co-founders. Check with a lawyer.)

5. After the 29 months of post-completion OPT, if you are not particularly attached to the United States, there are many countries that welcome startups and self-employed freelancers and issue visas for such people. One such place is Dubai, a modern metropolitan city with people from various backgrounds. The DTMFZA (Dubai Technology and Media Free Zone Authority) issues Freelance permits (for $3k/year) that let you be self-employed in the country. One of the great things about Dubai (and the UAE in general) are the zero taxes. To top it all, Dubai happens to be a really great city. Other options, perhaps include Singapore and other cities/countries, but I don't know about the immigration/visa deal for freelancers in those countries.

Good luck! If you have any further questions, feel free to reply to this thread -- I'll be monitoring it.

I've replied with some very practical advice relating to OP's specific situation (F-1 student) here: https://news.ycombinator.com/item?id=5191832

(Sorry if this sounds like I'm promoting it or anything. I just don't want my comment to get buried among the 150+ other comments here.)

What part of the law requires they look at his site? What part of having a really spiffy site on the internet instantly translates into someone running a legitimate company rather than a shell corporation?

To be frank, you're talking out of your ass here. You have no idea of the problems that paypal is facing, and you are imaging that frozen funds are somehow identical to profit for paypal. That's not the case at all. In reality paypal has to deal with a veritable army of fraudsters and organized crime members on a daily basis. And they are hugely sophisticated, well funded, and impressively capable. Paypal's successes against such folks happen in the dark, because typically these guys aren't going to go blogging and tweeting up a storm about how paypal shut down their international money laundering operation. But it happens all the time. And that's why paypal is often so aggressive in these cases. Because they've seen the "clueless international student with a side-business and no paperwork but a really fancy website" gambit played out a thousand times already. How do you tell the difference?

Easy, when the legitimate operation goes and gets its legal issues sorted out, gets a business license, gets a tax ID, EID, inputs an SSN, etc. and sorts out any other legal or ToS violations they have then paypal won't have a cause for freezing the funds anymore.

Now, you might say that we should change the rules, and make it easier for anyone and everyone to toss around hundreds of thousands of dollars across international borders without any documentation or the involvement of any sort of registered business entity. I'm somewhat sympathetic to such notions, but such changes would entail a plethora of complex and thorny ramifications that I think most people who implicitly hold such ideals almost certainly haven't thought through.

There is one complaint against paypal that is sensible and backed up by evidence, and that is that they often have crappy customer service. That does indeed suck, and it aggravates these sorts of situations beyond a level that is reasonable, and, of course, generates a lot of antipathy toward paypal that isn't fully warranted.

If people want to switch to paypal alternatives, they are certainly able to try. Of course, one wonders why there are so few which have a global reach and the convenience of paypal. It couldn't be that the problem of peer-to-peer international payments is at its core fundamentally quite difficult and that only one company has done the immensely challenging work to actually make it possible, could it?

Surely not.

Paypal sux.