Paypal made up US government threat

THERE WERE RED FACES all around at the Internet payment outfit Paypal after a senior executive claimed that it suspended the account of WikiLeaks because the US government told it that the international journalism website was involved in "illegal activities".

Paypal VP Osama Bedier said in an Internet video address that the US government sent it a letter saying that Wikileaks' activities were illegal in the US. He claimed that as a result it had to make the decision to suspend their account.

The only problem with that story is that the US State Department has denied it sent any such letter to Paypal. In fact US State Department spokesman Philip Crowley went so far as Twittering to categorically deny it and said that it was "not true".

Oops. Agence France Presse asked Paypal's French spokesman Marc Jaugey what Bedier was banging on about. Jaugey was a PR stuck with the fact he could not actually say that Bedier had made it up but at the same time could not say that the letter existed.

His quote was that, "based on the American government's position and in no way based on a letter directly addressed to PayPal the team that manages PayPal account general usage regulations froze the WikiLeaks account".

However there are signs that Paypal might be having a bit of a rethink about its plan. Jaugey said that it was a "freeze, not a confiscation" and it would last 180 days at most. If no legal ruling says that Wikileaks' activities are illegal, the account will be reactivated.

The US has a bit of a problem claiming that Wikileaks is illegal. US Attorney General Eric Holder said that it can not use the Espionage Act to target WikiLeaks' founder Julian Assange. The best that it can manage will be a charge of trafficking in stolen government property instead.

However legal experts say that route will not work either, as Wikileaks' publication of the leaked diplomatic cables is just reproducing the files rather than stealing them.

Then there is also the small matter of the freedom of the press. µ