Bitcoin Forum

After coming under intense pressure PayPal has closed the account of cloud-storage service Mega. According to the company, SOPA proponent Senator Patrick Leahy personally pressured Visa and Mastercard who in turn called on PayPal to terminate the account. Bizarrely, Mega's encryption is being cited as a key problem.

During September 2014, the Digital Citizens Alliance and Netnames teamed up to publish a brand new report. Titled ‘Behind The Cyberlocker Door: A Report How Shadowy Cyberlockers Use Credit Card Companies to Make Millions,’ it offered insight into the finances of some of the world’s most popular cyberlocker sites.

The report had its issues, however. While many of the sites covered might at best be considered dubious, the inclusion of Mega.co.nz – the most scrutinized file-hosting startup in history – was a real head scratcher. Mega conforms with all relevant laws and responds quickly whenever content owners need something removed. By any standard the company lives up to the requirements of the DMCA.

“We consider the report grossly untrue and highly defamatory of Mega,” Mega CEO Graham Gaylard told TF at the time. But now, just five months on, Mega’s inclusion in the report has come back to bite the company in a big way.

Speaking via email with TorrentFreak this morning, Gaylard highlighted the company’s latest battle, one which has seen the company become unable to process payments from customers. It’s all connected with the NetNames report and has even seen the direct involvement of a U.S. politician.

According to Mega, following the publication of the report last September, SOPA and PIPA proponent Senator Patrick Leahy (Vermont, Chair Senate Judiciary Committee) put Visa and MasterCard under pressure to stop providing payment services to the ‘rogue’ companies listed in the NetNames report.

Following Leahy’s intervention, Visa and MasterCard then pressured PayPal to cease providing payment processing services to MEGA. As a result, Mega is no longer able to process payments.

“It is very disappointing to say the least. PayPal has been under huge pressure,” Gaylard told TF.

The company did not go without a fight, however.

“MEGA provided extensive statistics and other evidence showing that MEGA’s business is legitimate and legally compliant. After discussions that appeared to satisfy PayPal’s queries, MEGA authorised PayPal to share that material with Visa and MasterCard. Eventually PayPal made a non-negotiable decision to immediately terminate services to MEGA,” the company explains.

What makes the situation more unusual is that PayPal reportedly apologized to Mega for its withdrawal while acknowledging that company’s business is indeed legitimate.

However, PayPal also advised that Mega’s unique selling point – it’s end-to-end-encryption – was a key concern for the processor.

“MEGA has demonstrated that it is as compliant with its legal obligations as USA cloud storage services operated by Google, Microsoft, Apple, Dropbox, Box, Spideroak etc, but PayPal has advised that MEGA’s ‘unique encryption model’ presents an insurmountable difficulty,” Mega explains.

As of now, Mega is unable to process payments but is working on finding a replacement. In the meantime the company is waiving all storage limits and will not suspend any accounts for non-payment. All accounts have had their subscriptions extended by two months, free of charge.

Mega indicates that it will ride out the storm and will not bow to pressure nor compromise the privacy of its users.

“MEGA supplies cloud storage services to more than 15 million registered customers in more than 200 countries. MEGA will not compromise its end-to-end user controlled encryption model and is proud to not be part of the USA business network that discriminates against legitimate international businesses,” the company concludes.


http://torrentfreak.com/under-u-s-pressure-paypal-nukes-mega-for-encrypting-files-150227/



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Time is of the essence for bitcoin and a fully decentralized, distributed and open sourced end to end mass storage encryption network...

Paypal's loss could be Bitcoin's gain here.
There is no central operator whom the US can bully into blacklisting Mega here.  :)

If you don't let the NSA in then they will find a way of shutting you down. ( Not explicitly the NSA but the umbrella conspiracy of all agencies ) Fuck em.


PLus they obviously want to ruin Kim anyway they can...I just hope he wins out in the end.


I'm glad there is encryption they cannot beat easily. Mega's and more importantly bitcoin.

PayPal are becoming quite the bastards for doing this sort of stuff (then add on top of that their already rapebastard fees), but I'm actually glad they are doing this along with the credit card companies also refusing to work with them because what better excuse to use bitcoin? Companies like PayPal and Visa etc may just end up shooting themselves in the foot with this behaviour.

But they haven't shut down bitcoin, almost makes you consider that the NSA has a back door into bitcoin, as has been speculated in the past.

Forgettin conspiracy theories, bitcoin would seem the obvious answer for anyone beng locked out of a payment system, especially one that s legitimate like mega.

I would argue that Bitcoin is too big for them to shutdown. They cannot explicitly try to shut down Bitcoin companies because they will be hauled over the coals in courts. The pressure would be subtle - difficulties in dealing with banks, cumbersome compliance procedures, extensive record-keeping requirements. If you look at the BitLicense being proposed, you know that times are going to change.

Then again there may be peer to peer file sharing on the horizon, which would obsolete many cloud services.

A correction to the above conspiracy theory.   It isn't the way of the NSA to "shut xyz down", but more typically to gather intelligence about it.  OTHER AGENCIES, in the pocket of krony banksters, may well have such desires.  There is no "THEY" but a motley zoo of animals.

This kind of thing is why we need decentralization.
Kim Dotcom did nothing wrong and is being unduly punished by the US government for what am mounts to effectively nothing.
Denying donations due to encryption is stupid.

Basically here you are looking at the Hollywood mafia trying to shut him down by leaning on their government cronies.  The trend of MC/VISA playing judge, jury and executioner for whatever forces buy it off is rather troubling.

Why has this thread essentially ignored that private corporations - MC/VISA, are the ones that have taken these actions - and immediately diverted to government/NSA/blah blah blah?

MC & Visa are public corporations. Everyone must be on the take.

Another reason why I stopped using paypay years ago.
Everyone should just boycott the dam service. Find yourself another way to make payments.
Sure it's a little inconvenient but by continuing to use their service, you contribute to this.

I cannot believe how in the year 2015 can there be so many friggin' retarded sheeple on the planet that they still depend on Painpal to make payments??!! How can people depend on that criminal organization?

Painpal is just one method of payment, there are so many others and there is always Bitcoin...

Hopefully in a few years, Painpal will have become unimportant and no longer be able to blackmail businesses... >:(

But wasn't it just in 2014 that we saw major complaints against Paypal emerge?

Just trying to get the historical sequence right.

If Paypal was nearly as bad as you make it out to be, there would be a huge market opportunity for anyone to replace them with a 'less evil' business offering the same services. Any business that feels wronged by Paypal obviously won't use them. But far more businesses apparently see the value they offer, which is why Paypal has grown to the size it has. Bitcoin maybe has an opportunity to reduce fees even further, but as long as the price is so volatile, no business will want to deal in bitcoins. The biggest hurdle to bitcoin supplanting something like Paypal as a payment processor is bitcoin itself.

This is interesting Kim Dotcom went and tried to prove that even with compliance it does not matter
As long as people like this retain influence.
"SOPA proponent Senator Patrick Leahy personally pressured Visa and Mastercard who in turn called on PayPal to terminate the account. Bizarrely, Mega's encryption is being cited as a key problem."
The USA will still close your account and paypal services.

Kind of interesting paypal apologized though, I guess they can't ignore the other overlords...

I hope everyone now can see difference between centralised and decentralised solution for internet payments. Noone cant suspend anyone to use Bitcoin and that is real freedom. Decentralisation of money is HUGE gain for all free ppl around the world.

Only let the people and government think that he is being punished. Dotcom is way too shrewd to NOT be gaining profits off this closing, one way or another.

:)

which is why we need to support alternative DNS such as namecoin as well so domains can't be seized either.

And somebody needs to come up with an easy, sort of drag and drop method, for setting up a TOR site.

:)

This should be a conscious choice.

Bad companies will eventually go out of business if people stop using them!

That or builds a superior system and get the traction going
Hopefully it will be a Bitcoin based payment service NOT LOCATED IN THE USA
Since they might end up in a similar predicament there

Paypal sucks and I hope people screw them over more.

No Paypal exists only because US banking is massively disturbed. In Germany a bank wire is free, even 20 years ago it was free, nobody would use a scam service like Painpal to pay someone, but a simple free bank transfer.  :)

Due to the sick and twisted paper check based dinosaur US banking, Painpal could become powerful and finally, Ebay bought them and forces their users to offer Painpal in the US.  >:(

Painpal is terrible but they are a winner-takes-it-all sort of company

Bitcoin vola is not an issue if it is hedged or converted to fiat right away.

From a CUSTOMER perspective BTC is much better because Painpal freezes accounts and steals money all the time whereas Bitcoin wallets don't.

https://www.aboutpaypal.org/

That would be the perspective from a merchant's point of view. From a customer's point of view, there is always an option of chargeback if the goods are not up to the mark. Not advocating paypal over bitcoin, though.

Sad to see how quickly payment providers will bend over to US 'interests' (ie. being able to spy on all your data and communications).

Kind of reminds me of the payment blockade against Wikileaks, it was futile in the end as we can still donate bitcoin to this very day.

And Paypal is disrupting the massively disturbed US banking system. They've identified a market opportunity and have seized it, and people see the value in it, which is why they use it. If the market opportunity is so huge and obvious to replace Paypal, why hasn't anyone done it yet?

a lot of women only become pro-gun After they've been assaulted..,

Perhaps that's a valid point, but if it was as widespread a problem as people are attempting to portray, it wouldn't be a viable company. The millions of people who use the service speak more to merit than the handful of people complaining on internet in my mind.

PayPal has been ordered to cough up $7.7 million to the US government as a penalty for violating various US sanctions lists:
http://ria.ru/economy/20150325/1054492393.html

It's strange that they were so proactive with Mega... ???

U.S.A what a lovely country.....

Greatest country in the world...my ass

Kim is the main man, i hope america will get his repayment when BTC go mainstream and will swap silly funky ass dollars which are nothing more than fancy toilet paper.