RapidGator, one of the file-hosting sites that grew exponentially following the Megaupload shutdown last month, has been banned by PayPal. As a result, the Russian-based site says it will close the service in a month. According to PayPal, the RapidGator account was closed due to the "high risks" associated with processing payments to file-sharing services.

During the wake of the Megaupload raids in January, TorrentFreak kept a close eye on the cyberlocker world.

While many file-hosters panicked, former Megaupload users hopped from site to site trying to find a suitable alternative.

RapidGator was such an alternative, and in recent weeks the site saw its traffic increase from a few hundred to over a hundred thousand visitors a day. However, this newly gained popularity may only be short-lived as the cyberlocker has just lost its most popular payment option, PayPal.

“PayPal just informed us that our PayPal account is closed due to the high risks of processing file sharing payments,” RapidGator announced. According to the site’s operators this may very well be the end of the file-sharing industry.

PayPal has frozen the cyberlocker’s funds for 6 months and new users can no longer make payments through PayPal. The ban probably means that “affiliates” can’t be paid through PayPal either.

It’s not exactly clear what “high risk” PayPal refers to, but one of the most likely options concerns the many chargebacks people carried out at other cyberlocker services recently. Many users asked for their money back from PayPal when other cyberlockers such as Fileserve temporarily disabled public sharing.

RapidGator believes that PayPal’s policy will affect other file-hosters as well.

“Seems that all new file sharing hosts will experience same fate like us and all other big hosts,” they write, adding that the site will close if nothing changes in the coming month.

“We did our best to make it work, but unfortunately this circumstance doesn’t depend on us. We will run the host for a month, and if nothing will change, we will close it after,” the RapidGator team concludes.

While more cyberlockers may fall victim to the same fate in the future, for now many of the largest sites including 4Shared are still accepting PayPal payments.