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PayPal froze Skullgirls IndieGoGo funding

Ben Parfitt
PayPal froze Skullgirls IndieGoGo funding

Developer Lab Zero Games had to overcome payment firm PayPal to keep development of Skullgirls on track.

The game was the subject of a successful crowdfunding campaign on IndieGoGo, raising just under $830k last month.

However, PayPal froze the studio’s account and threatened to keep it locked unless it received assurances that the developers had a financial fallback should existing backers decide to drop out.

“Paypal’s freeze on our account is making it so that I can’t pay people today,” Lab Zero chief executive officer Peter Batholow said according to VentureBeat. “I am pretty fucking pissed. I sent them all the documentation they asked for last night, hoping it would be resolved today, but didn’t hear anything back.”

“I think it’s sketchy, but their logic sort of makes sense. Basically, they are terrified of chargebacks. If we spend all the money and don’t deliver and everyone [requests] chargebacks, PayPal is concerned they will be on the line for [the money].

“So, they are effectively treating it as a loan. I mean, the guy flat out said: ‘Until the threat of chargebacks has passed, PayPal is effectively financing your development’.

"They also asked if we're good for the $700,000 if something goes wrong. I said 'no', because, well we're not? The whole point of crowdfunding is to give us the money to develop stuff, not take out a loan."

PayPal eventually unfroze the account but has retained $35,000 as collateral.

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Tags: paypal , funds , finance , frozen , Kickstarter , skullgirls , lab zero games

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