Updated: Paypal has given us this response, which it says we can attribute to a “Paypal spokesman”

“PayPal can confirm that we have decided to end our relationship with Mega for business reasons. We respect the privacy of all our customers and former customers and will not provide further details about this decision.”

Paypal, a long time supporter of Kim Dotcom’s Mega.co.nz site, has stopped processing payments for the cloud storage company. Dotcom cites pressure from governments, MasterCard, VISA and Mega’s unique end-to-end encryption for the apparent singling out of his company. Dotcom also tweeted out a small hint that Bitcoin could be the currency his company uses going forward.

Far short of confirming anything, Dotcom simply tweeted out a short message after revealing that Paypal had dropped support of his company.

It is possible that the tweet was simply a throw away comment, but given the timing, it seems like there is more to this. Dotcom has been teasing the bitcoin community for weeks now, hinting that his next project “MegaNet” could involve bitcoin or blockchain technologies in some way.

Mega.co.nz is seen as somewhat of a spiritual successor to Dotcom’s previous venture, Megaupload.com, which eventually had its server’s seized. Dotcom managed to avoid jail time but the experience caused him to revamp how he handles things. Mega.co.nz deeply encrypts user files, making it impossible for anyone to know what is stored on their servers. Mega claims even it doesn’t know. However, it does comply with DCMA takedown requests and the vast majority of the files stored on the server are legal files, according to the blog post that announced the Paypal decision.

While Paypal has not yet commented publicly on why it stopped serving Mega, the Mega blog post included a detailed account on why Mega thinks the decision was made. According to the blog post, Mega was named in a report by NetNames, a think tank and consultant group Mega says is partially funded by the MPAA. Mega says that it was named as an illegitimate cloud storage company, if that is true, it is unclear what, other than Dotcom’s involvement and Mega’s proprietary end-to-end encryption makes the services different than other storage companies like Dropbox.

According to Mega, Senator Lehay pressured VISA and MasterCard to drop support of the companies named in that report, including Mega. Subsequently, VISA and MasterCard then pressured Paypal into dropping Mega. While the blog post says Paypal was apologetic about the decision, it also says that the decision is non-negotiable.

Mega provided a list of statistics that it feels illustrates the legitimacy of the company, including that the vast majority of files are under 20MB and of the more than 4 billion files hosted, only 0.011% of them have inspired a DCMA takedown request.

If Mega’s assertion is true and Paypal was pressured, ultimately by the government, into dropping Mega, that is clear case of censorship; something Bitcoin was designed to circumvent. The Wikileaks and Bitcoin story is well known, this could be the second example of Bitcoin allowing the people to circumvent the traditional gatekeepers. We just need Kim Dotcom to stop being such a tease and start accepting Bitcoin payments.

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