Per the article, Paypal is seizing the money as damages:
> It also said that the money was taken from her account "for its liquidated damages arising from those AUP violations pursuant to the User Agreement.
> It also said that the money was taken from her account "for its liquidated damages arising from those AUP violations pursuant to the User Agreement.
So I looked up the AUP, and indeed: they claim $2,500(!) liquidated damages per violation of the AUP, which is on average a ridiculously high amount. Selling 10 individual bottles of wine without approval will incur $25,000 damages under this scheme.
Given these terms, you have to be absolutely nuts to sign any agreement with Paypal.