They could just as well hedge the "PayPal-Bitcoin" they hand out to their customers with unbacked Bitcoin futures. They don't necessarily have to buy the underlying as long as they can find some other party who's willing to engage in a bet about the future of the Bitcoin price.

Though I must admit that it's doubtful for them to find enough cash to take the other side of this bet, so most likely they have to resort to actual Bitcoin bought from liquid exchanges or OTC.