TorrentFreak blog recently reported that PayPal has cut off VPN provider iPredator, a VPN service launched by Pirate Bay co-founder Peter Sunde.

PayPal is known for its aggressive stance against BitTorrent sites, Usenet providers and file-hosting services, so it isn’t exactly a surprise when they decided to block payments towards a VPN provider.

Widely known as the “Pirate Bay” VPN, iPredator is based in Sweden owned by Peter Sunde, and operated by an independent non-profit organization.

PayPal has stopped all the payment services to the Swedish provider and the company has had all of its assets frozen for the next 180 days.

Although the payment service provider did not specify why the service was banned, it follows the recent development that iPredator’s credit card processor Payson has stopped doing business with all VPN services. It was followed by early July that the credit card companies MasterCard and VISA run no more payments to Swedish VPN provider. For several weeks iPredator users can no longer pay with MasterCard or Visa over the Swedish payment processor Payson.

Sunde informs TorrentFreak that PayPal announcement came without prior warning and the company didn’t specify the reason as to why the VPN provider is no longer allowed to accept payments. The team behind iPredator is particularly frustrated by the lack of clarity of the situation and how they received no warning before it happens, saying they would like to know why they are banned. Sunde believes that the two incidents are related.

“It’s not a coincidence that we are banned from Payson, and then PayPal a few weeks after,” he told TorrentFreak.

The iPredator team has been informed by one large European payment processor that they have been put on a blacklist of services and not allowed to accept credit card payments.

“One processor we talked with, to replace Payson, told us that we were on a blacklist of services that are prohibited to accept credit cards. This apparently happened shortly after Payson announced it could no longer process MasterCard and Visa payments for VPN providers,” Sunde explains.

TorrentFreak suspected stops in payment by MasterCard and VISA to the VPN provider are measures in the fight against copyright infringement. And PayPal was already named at that time in connection with such methods. Or, maybe it’s the constant battle against file-hosting and torrent sites which extended to VPN providers.

Both MasterCard and Visa said they have no policy to ban VPN services, but that they occasionally disconnect merchants who violate their terms. However, Sunde believes that they are covering something up.

“It’s a sad day for democracy when third parties interfere with legal business, and then lie about it. This is typically something we hope someone leaks so we can see what they are morally censoring,” Sunde adds.

As TorrentFreak points out, perhaps iPredator’s affiliation with The Pirate Bay is to blame for the situation or because VPNs are starting to become tricky business. Whatever the real reasons behind the move, iPredator is now stuck with looking for new services to continue to fund. One option seems to be Bitcoin.

PayPal has a history of blocking services the company apparently found as debatable. A few years back, PayPal froze the account of WikiLeaks, claiming that WikiLeaks was in violation of PayPal’s terms of service.