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PayPal banned WikiLeaks after US gov intervention

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Updated A PayPal executive said his company's decision to suspend payments to Wikileaks came after the US State Department said the whistle-blower site was engaged in illegal activity. The comment came shortly before PayPal agreed to release the remaining funds in the WikiLeaks fund-raising account.

Press accounts from The Guardian and TechCrunch differ, but both claim that PayPal's move was influenced by statements from the State Department.

“State Dept told us these were illegal activities,” PayPal VP of platform Osama Bedier told the LeWeb conference in Paris, according to this report from The Guardian. “It was straightforward. We ... comply with regulations around the world, making sure that we protect our brand.”

TechCrunch reported much the same thing but later updated its post to say: “After talking to Bedier backstage, he clarified that the State Department did not directly talk to PayPal.” He went on to say that the online payment service was influenced by a November 27 letter State Department officials sent Wikileaks founder Julian Assange and his attorney.

“As you know, if any of the materials you intend to publish were provided by any government officials, or any intermediary without proper authorization, they were provided in violation of US law and without regard for the the grave consequences of this action,” the letter, signed by State Department legal adviser Hongju Koh, stated. “As long as WikiLeaks holds such material, the violation of the law is ongoing.”

The letter didn't cite any specific US statutes WikiLeaks was violating.

WikiLeaks went on to release a trove of State Department memos that aired confidential diplomatic communications.

PayPal representatives didn't respond to emails seeking clarification about the influence of the State Department.

But late on Wednesday, PayPal General Counsel John Muller said: “While the account will remain restricted, PayPal will release all remaining funds in the account to the foundation that was raising funds for WikiLeaks. According to The Washington Post, there was about $80,000 in the account.

Muller went on to defend the permanent closure of the account by saying the online payment site is “required to comply with laws around the world.”

“Ultimately, our difficult decision was based on a belief that the WikiLeaks website was encouraging sources to release classified material, which is likely a violation of law by the source,” he continued.

Muller's argument made no mention of organizations such as the International Tibet Network, which continues to solicit donations through PayPal even though some of their activities almost surely violate Chinese laws.

Over the past few days, other financial services, including Visa, MasterCard, and the Swiss bank Post Finance, have also suspended services to Wikileaks and Assange. The move has prompted criticism on Twitter and elsewhere by users who point out that Visa and MasterCard still permit payments to Ku Klux Klan groups but not to a group that so far has been charged with no crime.

Distributed denial of service attacks by people sympathetic to Wikileaks soon took out MasterCard and were also reported against EveryDNS.net, which suspended one of WikiLeaks domain names. US Senator Joe Lieberman and Sarah Palin – both outspoken WikiLeaks critics – and Swedish prosecutors, who are investigating Assange for alleged sexual offenses, have also been targeted, according to reports. A PayPal blog was also disrupted by attacks.

The Register has asked Visa and MasterCard to comment. This post will be updated if either responds. ®

This article was updated to add details from Muller's blog post.

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