PayPal freezes out ProtonMail, asks if startup has 'government permission' to encrypt email

PayPal freezes out ProtonMail, asks if startup has 'government permission' to encrypt email

Summary: Secure email startup ProtonMail is facing questions over its legality after PayPal froze its account -- as well as over $285,000 in crowdfunding donations.

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TOPICS: Security
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PayPal has frozen the account of security startup ProtonMail, and has questioned whether the firm is legal — and has "government approval" to encrypt emailed communication.

ProtonMail is a Swiss-based email service that offers full end-to-end encryption for emails. Developed by MIT, Harvard and CERN researchers, the startup is in the midst of an Indiegogo crowdfunding campaign to get the service off the ground, and has so far managed to secure over $285,000 in funding.

The campaign's ethos is below:

We believe that privacy is a fundamental human right that must be protected at any cost. The advent of the internet has now made all of us more vulnerable to mass surveillance than at any other point in human history. The disappearance of online privacy is a very dangerous trend as in many ways privacy and freedom go hand in hand.

ProtonMail uses end-to-end encryption, which means your data is already encrypted by the time it reaches the company's servers — and so even the creators of the email service cannot read the contents. As the company has no access to these messages, they cannot decrypt them so such data cannot be passed on to third parties. ProtonMail uses servers based in Switzerland that are outside the jurisdiction of the US and EU, and no metadata is saved — in theory, keeping email content safe and users anonymous.

Emails can also be set to self-destruct after they expire. 

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The startup says that its account was frozen last week without any notification from PayPal. On Monday, ProtonMail received a call and email from the online payment service, stating that until further notice, the startup's account and assets within were frozen. In a blog post, ProtonMail said:

While the $275,000 ProtonMail has raised in the past two weeks is a large amount, it pales in comparison to many other crowdfunding campaigns that have raised sums in excess of $1,000,000 so we can't help but wonder why ProtonMail was singled out.

When ProtonMail pressed the PayPal representative further for the core reason why its account was frozen, the representative "questioned whether ProtonMail is legal," and importantly, if ProtonMail "had government approval to encrypt emails." This vague response certainly isn't enough for the startup, which writes:

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.

You can still contribute to the campaign through credit card or Bitcoin, but unless the account restriction is lifted, PayPal is no longer an option.

Update 18.28GMT: A PayPal spokesperson told ZDNet:

"PayPal recently made changes to the way it handled accounts of people who were using crowdfunding sites to support their ideas. In response to customer feedback we established a streamlined process to specifically support crowdfunding campaigns. This process involves engaging crowdfunding campaign owners early on to clearly understand their campaign goals and help them ensure their campaigns are compliant with our policies and government regulations.

In the case of ProtonMail, a technical problem this week resulted in PayPal applying restrictions to the account. We have contacted ProtonMail today to solve this and can confirm that ProtonMail is able to receive or send funds through PayPal again. We are sorry for any inconvenience caused."

Topic: Security

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51 comments
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  • Not a human right

    Privacy cannot logically be a human right because it's a limitation on another human. Your rights always end where another's begin.
    Buster Friendly
    • Which government body do you work for or are you a Vulcan?

      Everybody has a right to their privacy.

      We do not 'work' for governments they work for us, however it does now seem that PayPal does work for the government.
      pjc158
      • Not true

        No, it's not a right. You cannot demand someone not look in your window. It's your responsibility to put up blinds.
        Buster Friendly
        • You Just Contradicted Yourself

          So lets say I accept the potential of someone looking through my window and put up those blinds. Does that person now have the (Right) to come into my home and lift those blinds?

          I come from a long line of Govt Employees and I can assure you if you had a few drinks with my Aunt who was pretty high up Agency undisclosed employee you would think twice about her having the right to potentially view any of your personal data. She is a total whack job, thank God she is now retired.
          HelloChief
          • Not at all

            A right is something that applies to all circumstances. A right to privacy would mean you have a right to demand people not look at you no matter where you are or what you're doing. Instead if you want privacy, you have to seek it out.
            Buster Friendly
        • In a sense, you are right

          But there are both positive and negative rights. While the line is always blurry, as you suggest, there are rights that permit you to do things (positive rights) and rights that prevent things from being done to you (negative rights). For instance, in most jurisdictions around the USA, women have the positive right to wear short skirts and the negative right to be free from having pictures taken up them.

          With respect to in your home, you are right that people on the street have a right to look at your house, and thus if you want privacy in your living-room or yard, you should hang blinds or put up a fence. But I think most would say that you also have the negative right to not have people use thermal cameras to watch you through your walls or fly drones over your fence to photograph you in your back yard...we shall see what local legislators and judges decide.

          In this particular case, ProtonMail is exercising a positive right to encrypt email. Their goal is to solidify your negative right to not be monitored.

          The question is, is there any such negative right? Phone companies, for instance, are required by law to provide access to phone conversations to law enforcement with a warrant. Since ProtonMail cannot provide the access to email, there may be a question as to whether this service is legal. Individuals can certainly encrypt peer-to-peer, just like you have the right to speak in code over a phone line, but can a communications company do it on its users' behalf? Not so sure.

          That said, should PayPal be making this decision? Probably not. Do they have any right, positive or negative, to claim another company's assets? I suppose that depends on the ToS, but it strikes me as pushing the boundaries of legality.
          x I'm tc
          • paypal

            I can see your point, but it wouldn't be a problem. They could turn over ANY and all files that are in their possession and not have any problem. They would not have any way to decyrpt the files so they could give them up freely and not betray their users. The governments would have exactly what they asked for, given freely. They just couldn't (hopefully) use it.
            garyfizer@...
          • Legality of ProtonMail

            While it is true that the United States has designated itself the Global Police, there are some who disagree that they should have complete jurisdiction. ProtonMail is fully compliant with the laws of Switzerland, where the U.S is powerless to enforce their draconian anti-freedom regulation.
            singbiker
        • But you have the FREEDOM to put up blinds.

          The argument that privacy is not a right is saying that you have NO RIGHT to put up blinds or curtains if someone ELSE wants to look in, because they have a "right" to see everything that happens in your house.

          This email service is, in essence, selling you a locked box for your emails to which only the recipient has the key. PayPal is wondering whether that is LEGAL? Which big government agency ordered them to do this? And are they willing to lose a big part of their customer base for taking this action? Then someone must be paying them more than all the customers who will drop PayPal are currently paying them.
          jallan32
          • Only if it's your property

            You can only put up blinds if it's you're private property owned or rented. Basic human rights don't require property. I'm not arguing against private email. I'm arguing against the claim that privacy is a basic human right.
            Buster Friendly
          • So....

            Who determines what "basic" human rights are?
            HelloChief
          • NOT A RIGHT??

            You can argue all you want against OUR PRIVACY RIGHTS. But you will be swimming against the tide. PRIVACY IS MY GOD GIVEN RIGHT. I DO NOT HAVE TO SEEK OUT MY RIGHTS, ONLY A KOOLAID DRINKING OBOZO LIBERAL FAN WOULD ARGUE SUCH A ROTTING ARGUEMENT.
            t5j1sr
          • The right to privacy is a right protected by liberals

            It is conservatives who are routinely against the right to privacy.

            At least get your slander straight.
            x I'm tc
          • You've been watching too much MSNBC

            While I'm not a liberal nor conservative you might want to do some more research before throwing out a blanket statement on a party. While the Bush Administration really got this stuff rolling with the Patriot Act the Obama Administration furthered the cause by lifting additional restrictions on the NSA which involved email communications. But don't take my word for it. Read for yourself.

            http://www.dni.gov/files/documents/DNI%20Clapper%20Section%20702%20Declassification%20Cover%20Letter.pdf
            HelloChief
          • Settle down there, please.

            THIS "Koolaid drinking Obozo liberal fan" as you call me does NOT say you have to seek out your right to privacy, only that if you do make reasonable efforts to ensure your privacy (which, in the example proposed, is a practical requirement, NOT a legally imposed one, meaning you cannot expect privacy if you do private things in public, outdoors, or in front of an open window), you have the right to be protected from OTHERS OVERRIDING your efforts. And contrary to what you may have heard, it is LIBERALS who try to protect that right to privacy.

            Your sources of misinformation have somehow forgotten to remind you that the invasion of your privacy STARTED under the influence of conservatives: those in government (military and non-partisan civil servants) whose concern for preventing even the minimum risk of attack led them to begin surveillance of ALL persons living in their jurisdiction, even those not suspected of anything, just to avoid missing someone who was planning something; AND those in business leadership who began surveillance of ALL their employees to protect against the few who might cheat their company, and ALL customers in order to get advertising leads to increase revenue.

            Liberals deplore these violations of privacy, but because NOT ALL (in fact, only a minority) of citizens are liberal ENOUGH to put this concern above others, such as convenience (they knew it was time for me to buy some more widgets!) or fear (of losing a job, or of being a victim of terrorists), liberal OFFICE HOLDERS find that trying to stop already started surveillance risks the ire of the public (stoked by their political opponents, of course) if the lifting of some "security surveillance" has a bad outcome; for example, if the NSA were to stop spying on American's phone calls, and missed ONE conversation that would have prevented an attack that killed several people. Therefore, in the current political climate, even liberal politicians (such as President Obama) continue the policies started by their predecessors (such as those who passed the PATRIOT Act, remember?).

            If you and your allies are willing to let BOTH sides of the aisle in Congress know that you would RATHER take a chance on another 9/11 or Boston Marathon attack (or another Benghazi attack, for that matter) than PREVENT one at the cost of your right to privacy, and if ENOUGH of you threaten to vote against the party that is threatening it, THEN you will get action.

            And the "Koolaid drinking liberals" will be on your side!
            jallan32
          • Yeah

            You liberals did a great job backing the election to vote in a President that continues to weaken restrictions on Government Surveillance policies now you're right up there with the crew of conservatives that worship the Bush/Cheney administration. Why don't all of you Lefties and Righties go back to living under bridges where Trolls where meant to live.
            HelloChief
          • You can have both...

            ...what liberals and conservatives want at the same time. It's called fully homomorphic encryption, and it allows for math operations on ENCRYPTED files, which produce correct results, even though the OS performing the operations has no idea what is actually there. Hence, the NSA/military can search vast databases of encrypted records for certain characteristics, find a small number of matches, get a warrant for that small number and leave the rest of us alone WITHOUT knowing our FB password, last visit to the doctor, etc. This, of course, is the privacy outcome which you claim liberals want.

            FHE is not easy, and at the moment is impractical because it takes so much computing power to work, but that will change. My question: will the stakeholders in this fight be willing to know enough, but forego knowing all the details, in order to protect us, while still respecting privacy?

            I guess time will tell. ProtonMail and similar services will likely force the issue.
            ClearCreek
          • Liberals

            I'd have to say that ALL the liberal people I know feel the same way you do about privacy rights. In fact the ACLU (a liberal organization) has fought many times to assert the peoples right to privacy.
            jnowski
          • MY RIGHTS

            AND WHO DO YOU PROPOSE TO DICTATE OUR "BASIC HUMAN RIGHTS"?
            t5j1sr
          • Society?

            How do you define "Basic Human Rights"? Someone has to. The Fourth Amendment doesn't give sweeping rights as the author quoted. The courts have only determined that the amendment means that, for some things like our homes, the police need to have a warrant. The only other rights we get is "lfe, liberty and the pursuit of happiness" (we don't have a right to be happy; we only have the right to pursue that).

            Most countries do not give out privacy as a basic human right.
            hforman@...