Seafile is a file hosting system where files are stored for customers on a central server that can be synchronized with mobile devices and personal computers.

Files can also be accessed using the Seafile’s web interface. Their system functions like other popular services such as Google Drive and Dropbox with the exception that they are a free and open source service. This means Seafile customers can host their own Seafile servers without worrying about limits being imposed on storage space or client connections.

Recently the open source cloud storage firm made news when they dropped Paypal as their primary payment processor firm and switched to bitcoin as their main payment vehicle.

Seafile is a fully-encrypted and open source file storage system that competes with other major service. The German company charges clients for storage space, but any can fun on a Seafile server and even compete directly with them.

Seafile has always taken great pains to insure the privacy of their clients’ files. They state that thousands of teams with over 300,000 members use their services world-wide including the major anti-virus company, Kaspersky Labs

Everything seemed to be running smoothly with their payment collector partner PayPal until June 19, 2016. That’s when Seafile issued a terse statement saying they would no longer accept payments through PayPal.

Their explanation for the abrupt action was that PayPal had suddenly demanded that Seafile monitor data traffic as and all of their customers’ files for illegal content. In addition, PayPal had also asked Seafile to forward detailed statistics about the files of their customers.

Earlier in June, Seafile has received a notice from PayPal that they were in violation of the terms of their contract. Accompanying the notice was a questionnaire that appeared to be seeking details of Seafile’s business plan.

After responding that Seafile is not a file-sharing service and does not monitor customer data, they waited two weeks for a reply.

Paypal made a weak apology but continued with the demand that Germany-based Seafile turn over their customer traffic data.

In the opinion of Seafile’s attorneys, that request was a violation of privacy laws and their client’s privacy rights.

While they were waiting to have the issue resolved, Seafile temporarily provided their cloud services for free. When this was announced on the Seafile blog, a number of customers suggested that they drop PayPal and switch to bitcoin payments.
Although they’d considered taking bitcoins as an alternate payment method in the past, Seafile was pleasantly surprised by the heavy volume of positive feedback for bitcoin they received from their customers.

When the bitcoin payment processor BitPay approached the company and explained their payment system, Seafile management realized that the two companies were a natural fit.
There had always been some hesitation for the German company to work with U.S. based PayPal as their payment service provider. With BitPay, that is no longer an issue.

Whether PayPal will try and make amends for their surprise shenanigans remains to be seen. Certainly loosing Seafile as an account has left some PayPal folks with embarrassed faces and running for cover.

Now when you go to the Seafile website, you’ll see the bitcoin option prominently displayed at the top of the other payment options like Visa and MasterCard.

Conspicuously missing is the familiar PayPal logo and payment option.