Update: A spokesperson for PayPal has informed us that the situation has been resolved. The company's statement can be found below:
"We have reached out to Nyu Media and the issue has been resolved. We want to reiterate that supporting these campaigns is an exciting new part of our business. We are working closely with industry-leaders like IndieGoGo and adapting our processes and policies to better serve the innovative companies that are relying on PayPal and crowd funding campaigns to grow their businesses. We never want to get in the way of innovation, but as a global payments company we must ensure the payments flowing through our system around the world are in compliance with laws and regulations. We understand that the way in which we are complying to these rules can be frustrating in some cases and we've made significant changes in North America to adapt to the unique needs of crowd funding campaigns. We are currently working to roll these improvements out around the world."
Original Story: Once again PayPal is running interference on indie developers trying to get their money raised through the digital payment system. This time out it is the small team behind indie fighting game Yatagarasu Attack on Cataclysm – being developed by three former SNK / King of Fighters developers. After successfully raising $120,000 on crowdsourcing site Indiegogo they have been told by PayPal that they can't have all the money. In an email to the developers PayPal told the team that they could have 50 percent of the funds before the game's release and the rest only after they have provided more proof. In an email to Kotaku the group explained the situation:
"The email from PayPal advises us that they have ‘reserved’ the funding and will release ‘up to 50% of the funds’ before Yatagarasu AoC is released and the rest only after they have verified copies of paid invoices. What’s more, they provide no option to discuss, stating we should ‘contact us closer to the release date beginning of next year’ to arrange release of the funds.
We appreciate irony as much as the next person, but PayPal refusing to provide funds legitimately raised to complete a game until after the game is released isn’t just beyond ridiculous – it potentially derails the game development. To add insult to injury, not only do Nyu Media and the Yatagarasu developer team have rock solid track records, but we’ve already provided PayPal with documents providing the bona fides of Nyu Media, the developer, and the campaign."
This is the second indie developer we know of that has had funds withheld: the first was the Skullgirls Indie GoGo campaign earlier this year. Only after the developers of that game filed complaints with the Consumer Financial Protection Bureau that PayPal released their money.