(UPDATE: PayPal have now reinstated Seafile’s account. See full statement below. However, Seafile GmbH’s CEO Silja Jackson says it will no longer use PayPal as it “cannot trust them anymore”)

Cloud storage platform Seafile was told to remove PayPal from its sites after refusing demands to monitor customer data and users’ files, the developers behind it said.

In a post on the platform’s German website the team behind the system, which provides a similar service to Dropbox, said they would temporarily offer its services for free after removing PayPal from their sites.

They said PayPal “demanded that we monitor data traffic as well as all our customers’ files for illegal content” and asked them to give PayPal “detailed statistics about the files types of our customers sync and share”.

The team said the move would be “morally wrong” as well as against German and European data protection laws, so had refused to comply.

The post goes on to say how the US company then told them to remove PayPal’s payment services from the site within four days.

Seafile’s file syncing and sharing platform allows organizations to keep control of all their data and is developed by two companies, Seafile Ltd., located in China, and Seafile GmbH, located in Germany.

The team said they first received a notification that the platform was in violation of PayPal’s T&Cs on June 2.

They said they replied to PayPal explaining their stance, before receiving a reply on June 14 asking them to remove PayPal from their sites.

They said they then got in touch again with PayPal to further explain their situation, but a member of PayPal’s “brand risk management team” told them the decision was final.

UPDATE – June 22, 2016

After we contacted PayPal for comment, they issued the following statement saying they had reviewed Seafile’s account and it had now been reinstated.

A spokesman said: “PayPal has reinstated the account of Seafile following an additional review of the merchant’s business operations.

“Privacy is at the core of PayPal’s business model and we do not and have never required a merchant to intrude on the privacy of its customers.

“In our role as a global payments provider we must look at the full details of a service’s operations and compliance, including how the company addresses the laws and regulations related to the sharing or dissemination of illegal or infringing content as well as the policies of PayPal’s processing banks and card networks.

“We review these matters on a case-by-case basis. We regret that we made an error in the case of Seafile and apologize for any disruption this may have caused to their business.”

UPDATE 2 – June 22, 2016

Seafile have said they will not return to using PayPal despite having their account reinstated. CEO of the German company Silja Jackson told Fortune that it “cannot trust them anymore”.

Jackson said Seafile is now looking at using a German payment system. She said: “They said they realized we are not a high risk business.

“In my opinion, they realized all the waves it caused and they’re trying to do some damage control. They wouldn’t have changed their mind if so many people weren’t yelling.

“I appreciate the gesture on their part, but for us the trust is gone.”