Facing a booing crowd in Europe, a PayPal executive tried to explain why his company blocked donations to Wikileaks. He cited a letter from the State Department calling the secrets-sharing site illegal. Sadly for him, no such letter exists.

Speaking at the LeWeb conference in Paris, PayPal VP Osama Bedier faced "boos from the mostly European audience" when he was asked why PayPal froze Wikileaks' account. He responded:

"On Nov. 27, the State Department - the U.S. government, basically - wrote a letter saying the Wikileaks activities were deemed illegal in the United States."

As the New York Times has now pointed out, that's simply not true. The State Department "did not argue that publication of the documents by WikiLeaks, or any media organization, would be illegal." Instad, the State Department letter said the documents were leaked illegally, writing the documents were "were provided in violation of U.S. law... As long as Wikileaks holds such material, the violation of the law is ongoing."

This letter, further, was not sent to PayPal at all, but to Wikileaks.

So PayPal cut off WikiLeaks' access to its own money due to a State Department lawyer's letter it was not a party to, and due specifically to an accusation of illegality within that letter that wasn't even directed at Wikileaks. Having formulated this bizarre position, it specifically asked, according to the conference moderator in the video below, that it be asked about this very topic on stage at a tech conference. Amazing!

Given the level of integrity and due diligence the financial services industry has shown over the past two years, it's fair to assume all those other Wikileaks accounts have been frozen due to legal and ethical consideration that's about as solid as PayPal's.

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