A few years ago, Something Awful organized a donation drive for the victims of Hurricane Katrina and Paypal seized all the money, then kept all the fees before refunding:

http://www.somethingawful.com/d/news/paypal-fiasco-summary.php

Paypal is evil. Write that backwards on your forehead and then keep a mirror in front of you at all times.

Paypal have always been like this. Its nothing new.

I heard that Paypal's TOSs allow it do do things like this.

yea, but even if it is in there if it violates a countries laws it can still be fought. You can't contract yourself out of your legal rights. I wish there was more info on why it is happening.

Paypal can be beaten, my family took the Royal Bank Of Canada to court for a little over $500,000 (Canadain) and we beat them (my gramps had a life insurance policy with them that they tried to not pay when he died). All you need is a really good laywer, thats all.

To be fair, an Indie developer making millions of euros is a little suspicious.

Thing is, I'm prett y sure PayPal aren't subject to local banking laws and aren't regulated in the same way as other financial companies are. Which is the problem really, as there's no way any proper bank would be able to behave like this without getting hammered.

he made a very popular game by himself so all profit goes straight to him.

I believe that they are registered as a bank in Europe (Luxembourg to be precise, google says), so EU laws should give some protection to Markus who is European and seems to be living in Europe.

In the case of the US I think you are right, Paypal is probably subject to less laws over there.

I am not a violent person, or at least that's what I think, but if someone would try to steal 600'000 euros from me (huh, as If I ever could get that amount of money), I would definetely kill him.