PayPal Mafia

A group of researchers currently seeking funding for a secure email service, ProtonMail, today revealed that it will no longer be able to receive funds via PayPal, which suspended its account on Monday and will not restore it until it the proposed email service’s legality is determined.

PayPal is no stranger to withholding funds from secure email providers. It previously froze the funds of an Iceland-based company that crowdfunded support for a similar service, saying it would not free up the funds unless the company released the first version of its product or provided PayPal with “an itemized budget and [their] development goal dates.” (It released the company’s funds shortly after Ars Technica and other outlets reported the story.)

That might have been attributed to PayPal’s aversion to crowdfunding and its attempts to save naive consumers from scammers, but the researchers behind ProtonMail claim it was targeted because it’s designed to protect users from the eyes of the National Security Agency:

While the $275,000 ProtonMail has raised in the past 2 weeks is a large amount, it pales in comparison to many other crowdfunding campaigns that have raised sums in excess of $1,000,000 so we can’t help but wonder why ProtonMail was singled out. When we pressed the PayPal representative on the phone for further details, he questioned whether ProtonMail is legal and if we have government approval to encrypt emails. [...] It seems PayPal is trying to come up with ANY excuse they can to prevent us from receiving funds.

ProtonMail was launched by a group of Harvard and MIT students in response to the Snowden leaks, which made them “freaked out” about privacy issues, according to the outfit’s founder, Jason Stockman. The irony here, of course, is that Pierre Omidyar, chairman of PayPal, also funds and publishes The Intercept, whose star writers Glenn Greenwald and Laura Poitras are the only two journalists in possession of the complete cache of the Snowden NSA secrets.

In other words, Omidyar has a monopoly on the complete cache of NSA secrets; and, through PayPal’s near monopoly power in the online payments sector, Omidyar chairs a company that exerts life-or-death power over tech companies trying to evade NSA snooping.

The phrase for Omidyar’s dual role is “conflict-of-interest,” but few seem to notice, or care.

PayPal has a history of separating groups that might attract the government’s ire from their cash. The company prevented WikiLeaks from receiving funds via its service in 2010 — a move defended in an editorial from Civil Beat, which is funded by eBay founder Pierre Omidyar:

Unlike the press barons of old, the executives of these businesses cannot tell their shareholders that it will hurt their company more to cave on a matter of principle than to drop a customer. It is their right and common practice to shut a customer down when they receive complaints from criminal investigators, even without a court order. This even though the existence of a criminal investigation is no indication of guilt.

The executives have a fiduciary duty to do what’s best for their shareholders.And if they didn’t respond to government warnings, they very well could risk their own business being shut down.

But there isn’t a criminal investigation into ProtonMail, nor was there an investigation into the Icelandic company that just happened to be using a United States-based company to raise funds. In these cases it seems that PayPal would rather preemptively shutdown their accounts and prevent them from receiving support than accept any potential risk to eBay shareholders.

The researchers behind ProtonMail aren’t sure that theirPayPal access will be restored. They’re urging supporters to send funds via Bitcoin, which exists outside the control of payments companies which, apparently, moonlight as the government’s first defense against secure email services.