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ProtonMail hit by PayPal account freeze

ProtonMail hit by PayPal account freeze

ProtonMail, a Swiss start-up that looks to simplify high-quality email encryption, has found its PayPal account frozen with little explanation.

ProtonMail, a secure email start-up founded in 2013 by scientists at CERN in Switzerland, has claimed that eBay-owned payment processor PayPal has bowed to government pressure and locked its crowd-funding account - and in doing so has threatened the future of the project.

The brainchild of Andy Yen, Jason Stockman and Wei Sun, ProtonMail is a web-based email service which offers centralised cryptography management. Its promise is that any device, including tablets and smartphones, can use the system to send and receive entirely secure messages with none of the complexity normally associated with public key cryptosystems such as key management and distribution. Combined with its hosting in Switzerland, which has impressively strong privacy laws, the team behind it claim it's the perfect answer to recent revelations regarding the NSA and associates' tendencies to snoop outside their original charters.

It's a promise that has considerable backing: a crowd-funding campaign with a $100,000 goal was smashed with the project currently sitting on a whopping $251,721. Unfortunately, that cash is now locked as the result of PayPal freezing the team's account. 'Like many others, we have all heard the PayPal horror stories, but didn’t actually think it would happen to us on our campaign since PayPal promised, very recently, to improve their policies. Unfortunately, it seems those were hollow promises as ProtonMail is now the latest in a long string of crowdfunding campaigns to be hit with account freezes,' Yen wrote in a blog post on the matter.

'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. We are not sure which government PayPal is referring to, but even the 4th Amendment of the US constitution guarantees: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures…” It seems PayPal is trying to come up with ANY excuse they can to prevent us from receiving funds.'

PayPal has thus far been silent on the why and wherefore of the account freeze, with Yen and the team unable to elicit a response from the company. The move has raised concerns that PayPal may be bowing to pressure from elements within the US government to halt funding to the project, which aside from its payment processors is entirely outside their jurisdiction.

For now, the team has been forced to remove PayPal from its campaign page on Indiegogo with no promises that they will receive the funds currently locked away in their PayPal account.

UPDATE
ProtonMail has now confirmed that PayPal has lifted the restrictions on its account, claiming that publicity surrounding the freeze was likely responsible for the company's sudden volte-face.

17 Comments

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Spreadie 1st July 2014, 13:12 Quote
If they can't crack your encryption they'll starve you to death. Nice.
Parge 1st July 2014, 13:55 Quote
Someone now needs to crowd fund a paypal alternative.
ZERO <ibis> 1st July 2014, 14:19 Quote
Maybe these Swiss can figure out how to open a bank and compete directly. (but what would they know about banking...)
Anfield 1st July 2014, 14:24 Quote
Look at their stretch goal for $1,000,000...

"Our ultimate stretch goal will fund development of encrypted file storage and sharing."

In other words, piracy.

Also they fail to exclude certain Countries (like for example Iran, North Korea and Cuba) from all encryption services, which is a very big no no according to the US Government.
Spreadie 1st July 2014, 14:35 Quote
Quote:
Originally Posted by Anfield
Look at their stretch goal for $1,000,000...

"Our ultimate stretch goal will fund development of encrypted file storage and sharing."

In other words, piracy.

Also they fail to exclude certain Countries (like for example Iran, North Korea and Cuba) from all encryption services, which is a very big no no according to the US Government.

Oh, that settles it then. We might as well just lock them up right away - no need for legal oversight and those pesky rights thingies. :p
Atomic 1st July 2014, 14:35 Quote
Quote:
Originally Posted by Anfield
Look at their stretch goal for $1,000,000...

"Our ultimate stretch goal will fund development of encrypted file storage and sharing."

In other words, piracy.
Nothing new there
faugusztin 1st July 2014, 14:38 Quote
Quote:
Originally Posted by Anfield
Also they fail to exclude certain Countries (like for example Iran, North Korea and Cuba) from all encryption services, which is a very big no no according to the US Government.

Since when is Switzerland a member state of United States of America ? Did i miss something ? I am asking because US export bans do not apply to anything else but US.
Corky42 1st July 2014, 15:19 Quote
Quote:
Originally Posted by Anfield
"Our ultimate stretch goal will fund development of encrypted file storage and sharing."

In other words, piracy.
So only people who are pirating software have a need for encrypted file storage and sharing ?
Maybe we should close down every cloud storage service that allows users to share the files they uploaded, like the storage you get with Office 365, or Dropbox.
Quote:
Originally Posted by Anfield
Also they fail to exclude certain Countries (like for example Iran, North Korea and Cuba) from all encryption services, which is a very big no no according to the US Government.
So now the US can freeze the assets of anyone that doesn't abide by their laws ?
Last time i checked each country sets its own laws and foreign policy.
Anfield 1st July 2014, 15:29 Quote
Quote:
Originally Posted by faugusztin
Since when is Switzerland a member state of United States of America ? Did i miss something ? I am asking because US export bans do not apply to anything else but US.

And since when has the US Government let borders stand in their way of trying to enforce their will?
Also remember that they didn't take protonmail to court, they simply got the funding cut off which doesn't require any legal basis whatsoever because If someone dares to complain they'll just yell Terrorism and the protests about the lack of legal process will go away.
Quote:
Originally Posted by Corky42
So only people who are pirating software have a need for encrypted file storage and sharing ?
Maybe we should close down every cloud storage service that allows users to share the files they uploaded, like the storage you get with Office 365, or Dropbox.

The argument that it is the users that are responsible and not the file hoster didn't stop governments from taking down other file hosters like for example megaupload or hotfile and it didn't stop them from getting the TPB founders thrown in jail in very dubious trials either.
Quote:
Originally Posted by Spreadie
Oh, that settles it then. We might as well just lock them up right away - no need for legal oversight and those pesky rights thingies. :p

Why bother with a trial with evidence and all that when certain companies like paypal can be influenced to cut off funding?
CraigWatson 1st July 2014, 15:38 Quote
Very, very worrying.

Out of interest, is there any reason why they had the funds resting in a PayPal account? Surely any sane person would use PayPal as a transitory processing system rather than a bank account - especially if PayPal have a history of doing this to companies the US Government just happens to not like very much?

If ProtonMail is not directly involved in criminal activity, then surely the US government have no jurisdiction to freeze their funds?

I have no need for encrypted email, but I would certainly make use of ProtonMail if it ever got to production status. It's no longer the case that only people with something to hide use encrypted services - with so many government organisations like the NSA and GCHQ having a total disregard for anyone's privacy in the name of "national security", I should be entitled to secure what is mine.
Spreadie 1st July 2014, 15:50 Quote
Quote:
Originally Posted by Anfield
Why bother with a trial with evidence and all that when certain companies like paypal can be influenced to cut off funding?
Umm... that WAS my point!

You seem to be back-tracking.
Corky42 1st July 2014, 15:58 Quote
Quote:
Originally Posted by Anfield
The argument that it is the users that are responsible and not the file hoster didn't stop governments from taking down other file hosters like for example megaupload or hotfile and it didn't stop them from getting the TPB founders thrown in jail in very dubious trials either.

Indeed, It's a worrying trend isn't it.
Good job we don't do the same thing in RL, to think how many times a company would have been taken to court because people used one of their product or service illegally.

OMG you sold this person a car and he used it illegally why didn't you stop them ? you need to stop making cars.
coyote 1st July 2014, 16:20 Quote
I'm lucky enough to have a Protonmail account. I know someone has hacked my POP mail and webmail accounts as the details in some of the emails I get sent are way to accurate to be standard advertising tracking.
Only my ISP would have records of these and the people I send them to. I trust my ISP and the people I email about my personal stuff, so who else is seeing it?
Protonmail, Mmm, read that if you can!
I realise this could be used for nefarious purposes, but it's up to the various agencies to up their game with intelligence from other sources. I'm sure some sophisticated codes are used by dangerous, or just plain unpleasant people anyway via standard email. There's no such thing as "rights" in the real world, but it's nice to be able to send a personal email to a friend without some cretin or other reading it!
Gareth Halfacree 1st July 2014, 16:32 Quote
Quote:
Originally Posted by Corky42
Good job we don't do the same thing in RL, to think how many times a company would have been taken to court because people used one of their product or service illegally.
Ooh! I have something to contribute! Back in 1984, when video tape recorders (VTRs) were new and exciting, there was considerable concern that people might use them to - shock horror - pirate content. So much concern, in fact, that Universal City Studios sued Sony over its Betamax technology, claiming that the Betamax recorders were nothing more than piracy-enabling devices. Universal, you'll be pleased to hear, lost (as did Sony when VHS bit into its Betamax sales largely 'cos Sony wouldn't let people release porn on Betamax, but that's another story) and failed to get a ban on sales of Betamax and other VTRs.

This, in fact, created something known in US legal circles as the 'Betamax Defence.' Under said defence, if you can prove that an item has considerable non-infringing uses, then it is legal even if it has other uses that would be infringing. A DVD burner, for example, can burn pirated copies of commercial films - but it can also burn your home movies, back up your files and so forth. Result? Non-infringing.

In theory the Betamax Defence would prevent services like encrypted email and cloud file storage from being shut down under accusations of piracy, even if some of their users are using it for exactly that purpose. In practice, of course, it all comes down to who has the bigger legal fund - and that's never the guy on the receiving end of the court summons. C'est la vie.

As an aside, the same case - Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984) - made time-shifting content, i.e. recording it for later private viewing, legal in the US.
Umbra 1st July 2014, 16:59 Quote
SOD PAYPAL, many paypal users will have a debit card so use it!
koaschten 1st July 2014, 19:01 Quote
https://protonmail.ch/blog/paypal-freezes-protonmail-campaign-funds/

UPDATE 2: 7/1/2014, 1700h, PayPal has let us know that the restrictions on our account have now been lifted and we have been able to extract our funds. Thank you for your support on this matter, it no doubt played a large part in getting PayPal to do the right thing in record time.
Gareth Halfacree 1st July 2014, 20:04 Quote
Quote:
Originally Posted by koaschten
UPDATE 2: 7/1/2014, 1700h, PayPal has let us know that the restrictions on our account have now been lifted and we have been able to extract our funds. Thank you for your support on this matter, it no doubt played a large part in getting PayPal to do the right thing in record time.
Hooray! I've added that to the article, ta.
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