Is Paypal a Bank?

An open letter to Paypal:

As I understand it:

1. Paypal banned Moxie Marlinspike, a well known information security researcher, because he wrote some online security tools that could be used against Paypal and accepted donations using Paypal systems.
(More information can be found here)
2. Paypal has a policy banning writing software that can be used against it. I have not verified this.
3. Paypal held $500 of Mr. Marlinspike's money until he removed the Paypal link from his web site

This is just my unsolicited opinion, but I think this should be addressed at the highest levels at the company since it addresses some fundamental questions:

1.Can Paypal confiscate people's money for breaking its terms of service?
2.Is Paypal a bank?
3.Should the United States government step in and regulate Paypal as an interstate bank?

Regardless of whether my understanding of Mr Marlinspike's situation is correct, it appears that Paypal thinks the answer to question #1 is “yes”.

I don't know the answers to these questions, but I think Paypal would want the answer to question #3 to be “no”. If this is so, and I were them, I'd be concerned that this has the attention of the US Government

Perry Engle
Stratham NH