Signs that PayPal is accepting Bitcoin

Author: Velvet Gold Mine

PayPal was the hot new thing in payments when it went public in 1998, but in today’s age of digital currencies, crowdfunding, micro-crowdfunding, and peer-to-peer lending, most people no longer view the company as that. So to prepare for the new era of digital payments, PayPal has appointed a new board of directors.

To that end, PayPal (PYPL) announced on Wednesday the appointment of Wences Casares as chairman. Casares is the founder and CEO of Xapo, a payment wallet that offers the digital currency Bitcoin. Prior to founding Xapo, Casares also founded Lemon, also a digital payments company. But he is not a very prominent member of the board, which also includes AT&T executives and Pierre Omidyar, co-founder of the American Red Cross, Enzon Pharmaceuticals (ENZN), and eBay (EBAY).

This seems to be a sign of PayPal's readiness for Bitcoin and Bitcoin technology. It's particularly interesting that PayPal is often accused by some Bitcoin companies of being "Web 1.0" and too slow because its website has transmission delays and charges fees, while one of Bitcoin's biggest selling points is the ability to send money to another city with little or no delay and no fees.

“We have entered an era of unprecedented disruption to payments and financial services driven by the proliferation of mobile technology and the emergence of digital money,” PayPal CEO Dan Schuman said in a statement. “Vence’s successful track record as an internet finance entrepreneur and his focus on next-generation payments and cryptocurrencies are a natural fit for PayPal at this time.” PayPal declined to comment ahead of the news conference.

Casares's appointment was not unopposed. A serial entrepreneur, he founded Argentine brokerage in 1997 and sold it to Santander in 2000 for $750 million. He then founded a Chilean video game development company in 2002 and sold it to Activision (ATVI) in 2006. But now he is being sued by LifeLock (LOCK), a $1.3 billion public company that provides online identity protection.

In December 2013, LifeLock acquired Casares' company for $42.6 million. In the lawsuit filed in August 2014, LifeLock said Casares founded and launched his own company, Xapo, while still working at Lemon, and that Xapo "was developed by Lemon employees, using Lemon's facilities, executed on Lemon's computers, and using Lemon's money." Casares and four Xapo employees (each of whom previously worked at Lemon) are defendants in LifeLock's lawsuit, and the company wants Casares to reimburse "the value of Xapo's products that were marketed as a result of defendants' misrepresentations, breaches of duty, and other wrongful acts." The company did not specify the amount of damages he is seeking, but the damages assessment will also be within the company's value.

Meanwhile, Casares has fired back, filing his cross-complaint this past July against LifeLock, which alleged mismanagement (LifeLock itself paid a $12 million fine to the FTC this past summer for false advertising of its products). Some in the bitcoin community believe that LifeLock was mad because he paid more than it should have for Lemon, since Casares went to Xapo and raised $40 million in venture capital and is likely to do better in the future than he did with Lemon.

What does this legal drama have to do with PayPal? Probably nothing. But if Casares is found guilty in the civil fraud case against LifeLock, it would hurt not only Xapo but also PayPal. And, Fortune reported last year that some Xapo investors were angry because they were not aware of the lawsuit against Casares.

So PayPal’s appointment of Casares to its board is a risky move, not just because of the legal charges against Casares, but also because PayPal is now more closely tied to Bitcoin, an industry that has not been without its share of negative press (just this week, Ross Ulbricht, the mastermind of online drug marketplace Silk Road, who used Bitcoin as a payment method, was recently sentenced to life in prison). Just a year ago, PayPal struck partnerships with prominent Bitcoin startups like BitPay and Coinbase, but those partnerships, which were once highly publicized, are now largely ignored.

PayPal may now be looking to develop a more active presence around Bitcoin, or it may be interested in the underlying technology, the Bitcoin database, the public decentralized ledger that records every Bitcoin transaction. Financial giants JPMorgan and Nasdaq have both expressed interest in using the Bitcoin database.

Or maybe PayPal wants to acquire Xapo.

JPM compiled from

Yahoo Finance, Here`sa Sign that PayPal is Embracing Bitcoin, by Daniel Roberts.