PayPal Cancelled Mega's Account Because of Encryption (But Really Piracy)

By Adam Clark Estes on at

Mega is one of the only cloud storage services that offers end-to-end encryption, a great feature for people who value security. However, after political pressure from MPAA-affiliated goons, PayPal recently decided to stop providing payment services to Mega. What gives?

This is crazy, but unfortunately, it's not all that surprising. Mega's long been in the crosshairs of politicians like Patrick Leahy, the most senior Senator on Capitol Hill and a staunch supporter of both SOPA and PIPA. The obvious assumption here is that Megaupload's controversial past as a service used for pirating copyrighted content has bled over into the new service, simply named Mega, and people are now storing illegal content on its servers. As such, Mega claims that Leahy "pressured Visa and MasterCard to cease providing payment services to the companies named" in a recent report from an MPAA-supported organisation."

Then Visa and Mastercard turned around and pressured PayPal to cut ties with Mega. PayPal did just that, even though Mega showed that its services were just as compliant with the law as the cloud storage offerings from Apple, Google, and others.

In the end, PayPal offered a pretty lame excuse for why it nuked Mega: encryption. Mega's security is so good that PayPal can't tell what kinds of files people are storing on Mega. In corporate PayPal speak, the "unknowability of what is on the platform" is the reason the company won't process payments from Mega any more. Very weirdly, PayPal even apologised to Mega for the decision which makes you wonder whether Visa, Mastercard, or even guys like Senator Leahy are more responsible for this outcome.

Mega seems to be handling this crazy situation pretty well, though. Since it's no longer able to process payments, the company says it will "will temporarily not enforce its storage limits or suspend any accounts for non-payment and has extended existing subscriptions by 2 months free of charge." This, despite the fact that Mega's founder and party-boy-in-chief Kim Dotcom is totally broke. We've contacted both PayPal and Sen. Leahy's office to learn more about the situation and will update this post if we hear back.

[Mega, TorrentFreak]