PayPal and Cryptome is a respected website which for many years has served as an archive for documents relating to privacy and other matters. Its stated purpose is to make available to the public documents

that are prohibited by governments worldwide, in particular material on freedom of expression, privacy, cryptology, dual-use technologies, national security, intelligence, and secret governance -- open, secret and classified documents -- but not limited to those. Documents are removed from this site only by order served directly by a US court having jurisdiction. No court order has ever been served ...

The documents on Cryptome's website are available (for a small contribution) on two DVDs published by Cryptome, which has said that the "DVDs were and are intended to get the archive widely distributed as beneficial public information".

On March 5 PayPal shut down the PayPal account of John Young, the owner and operator of Cryptome, and said in a message to him:

As part of our security measures, we regularly screen activity in the PayPal system. During a recent screening, we noticed an issue regarding your account. We have observed activity in this account that is unusual or potentially high risk.

This "activity" was explained by John Young as due to "news reports about that has led to an unusual increase of donations." PayPal continued: "For your protection, we have limited access to your account until additional security measures can be completed."

Paypal then wrote to Cryptome: "Please explain your business model." Cryptome replied: "The PayPal transactions are donations to a public service, non-commerical, website, for DVD copies of the open, free, archive. It is not a business."

Cryptome then reported on its website on March 6 that

Paypal [has] confiscated donations made to Cryptome since February 24, 2010. The donations have have been refunded by Cryptome rather than leave them in the untrustworthy control of PayPal for purposes contrary to those of the donors..

and continued:

The timing of the confiscation corresponds to the recent Microsoft-Network Solutions copyright imbroglio and public attention given to the lawful spying guide series including those of PayPal. PayPal's legal agreements describe a wide range of prohibitions -- among them DMCA infringement, counter-terrorism, violations of AUP and catch-alls -- for use of its services and urges reporting of violations. It "limits" (suspend and/or close) an account without fully explaining the reasons, some of which may be secret under spying law, others kept confidential to avoid law suits or bad publicity.

On March 9 Anuj Nayar (director, global communications, PayPal) wrote to Andrew Orlowski of The Register:

I can confirm that all funds associated with Cryptome have been released.

Due to our privacy policy, we can't provide any further details about this account. PayPal's Acceptable Use Policy clearly states that we don't allow PayPal to be used for items that encourage, promote, facilitate or instruct others to engage in illegal activity.

The implication was clearly that Cryptome had been suspected of encouraging, promoting, facilitating or instructing others to engage in illegal activity.

On the same day John Young replied to Andrew Orlowsky:

PayPal is a fucking liar, a cheat and a thug, quote me.  ...

PayPal never told me the reason for blocking was for illegal activity, it merely said the account was risky without providing details or substantiation. This is a pattern it has followed with hundreds of others.

I want PayPal to document the illegality, make it public, don't hide behind unproven allegations sent to you without proof. It will try to hide behind privacy policy, a current scam used to hide unscrupulous actions by a host of giant thuggish firms.

On March 10 John Young replied to an enquiry by Karen Friar (Community and News Editor, ZDNet UK):

PayPal is lying to cover unknown substerfuge by itself by invocation of a privacy policy now more often used by large corporations to hide corporate malfeasance against customers rather than protect them. ...

It is certain that PayPal attacked Cryptome for posting its secret arrangements with authorities to spy on customers  [Also here.]

PayPal is following Microsoft's recent example in this attack. DMCA infringement or unsubstantiated allegations of illegality are the pretexts for these attacks when what is intended it to conceal embarrassing and unethical behavior toward the public.

Emphasis: Privacy policy is a deception to conceal corporate misbehavior against customers. DMCA is a means to censor the web as EFF and others have vigorously argued.

As a result of the bad publicity concerning PayPal's shutdown of Cryptome's PayPal account many PayPal users closed their accounts.

On March 15 John Muller (head of PayPal's legal department) wrote to John Young:

I wanted to reach out and apologize for PayPal's restriction of Cryptome's account. ... While our acceptable use policy states that PayPal cannot be used for activity that violates intellectual property rights or applicable laws, there is sometimes ambiguity when determining whether specific information published by sites like yours is in violation of that policy.

In this case, I believe the initial decision on your account was wrong, and we have reversed the restriction.  ... I'm particularly sorry for the inconvenience this has caused you.

John Young replied:

Your apology is inadequate for the harm caused by PayPal's actions to me, my website and its donors.

PayPal has never provided a complete and credible explanation for its limitation of my account and confiscation of $5,300.

Anuj Nayar, PayPal's global director of communications senior media representative alleged to Andrew Orlowski of The Register that Cryptome was suspected of illegal activity without providing proof.

Stephanie, PayPal's representative said to me by telephone that Cryptome's stated purpose was the cause of the limitation although nothing in the purpose is not allowable under law of the United States nor in violation of PayPal's acceptable use policy.

PayPal's limitation caused my refund of $5,300 to donors to Cryptome in order to counter your unilateral confiscation of the funds without substantiation.

PayPal's actions have caused damage to my reputation and Cryptome's, loss of funds and impugnment of the intentions of hundreds of supporting donors.

A meaningful PayPal response for its unsubstantiated attack on me, my web site and donors would address these serious damages and provide an amelioration commensurate with their gravity.

Your apology has not come close to that and is therefore rejected as insulting and unacceptable.

A copy of the Serendipity website is available on CD-ROM.  Details here.

Censorship Serendipity Home Page