PayPal blocks Diaspora
By Bala Shah

Diaspora is an open source project aimed at building a Facebook like social networking website. Their pitch is that unlike Facebook, Diaspora users will be in more control of their privacy.  Last year, more than 6000 individuals donated more than $200,000 to get it up and running.  Even the Facebook founder Mark Zuckerberg was so impressed with the idea that he made a donation to rival Diaspora as well.  They were profiled in every technology blog in USA and so built a national profile.

Now, Diaspora is saying that PayPal has blocked its funds after it requested its well wishers to donate more to complete the project

“
We had raised $45,000 in just a few days, and then PayPal froze our account.  Even though we’ve complied with every PayPal request, including providing them with our certificate of incorporation, they still won’t give us an explanation for any of their moves.  And it wasn’t buyer’s remorse: From the thousands of donations we received, we had only one complaint and refunded that person’s money immediately.  PayPal just sent us an email saying “appeal denied,” where they announced that they would lock up the Diaspora* community’s donations for 180 days.  Yes, you heard that right.  PayPal gets to earn interest on all of our donations for 6 months, while we have to wait for PayPal to come up with a reason to justify their decision.  And it seems that this is common practice for PayPal, as the case of Shelley Michaels, Steve Hudgell, independent developers, and so many others show.  Obviously, PayPal’s behavior is unacceptable, which is why we have asked our lawyer to get involved.
“