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PayPal stops payment delivery to Mega, citing 'business reasons'

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PayPal has cut ties and ceased all payments to Mega, Kim Dotcom's encrypted storage startup. Mega announced the news in a blog post, blaming Visa and MasterCard for pressuring PayPal into dropping the site. Mega was founded in the wake of MegaUpload's seizure by the US Department of Justice, and piracy rumors have followed the site since its inception.

According to Mega, Paypal dissolved the partnership over concerns that the site "has a unique model with its end-to-end encryption which leads to unknowability of what is on the platform." PayPal described the logic differently. "We can confirm that we have decided to end our relationship with Mega for business reasons," a Paypal spokesperson told The Verge. "We respect the privacy of all our customers and former customers and will not provide further details about this decision."

The move comes on the heels of a report by the Digital Citizens Alliance, which named Mega as part of a growing trend of anonymous cyberlocker services. The report described the services as fundamental to content piracy, "bleeding the Internet for profit while making it less attractive for generations to come." After the report was published, Senator Patrick Leahy (D-VT) urged credit card companies to cut off the businesses, including Mega alongside other services like 4Shared and RapidGator.