I would have never expected these kind of actions from a well established company and the fact that you can't recover your funds is shocking. By the way they never held my funds or anything they just asked me to remove the api and paypal logo from my site. I still have an account with them which I no longer use. I would look at the paypal agreement because the agreement protects both sides (usually). I don't think they have the right to keep or confiscate your funds.
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They have this fancy part of their terms that states they can do whatever they want with your account. Shut it down at their own discretion.
Problem is, we agree to it when we sign up.
But you'd think after 17 years...A simple email to let me know what made them SO UPSET would have been the least they could do. But nada...Nothing. Just we're done and I can't do a thing.
It's a blessing in disguise though. We've already moved forward and while it's going to be rough, we have plans in place. Never doing business with PayPal or Ebay ever again. And will make sure I spread the word on how little they are to be trusted.