I wonder if legal action can be taken against PayPal for demanding this kind of information. PayPal blackmailed them into breaking a law (they didn't break it but they suffered financial loss from not doing it).
If I told a customer who absolutely depends on my business to harass/attack somebody, I would certainly hold liable as well.
Or can PayPal take legal action against them for violating ToS? Did they properly disclose they were a file sharing site (as required by PayPal) before signing up to take payments? If they can't meet PayPal's ToS, they shouldn't have signed up. [Paypal sucks, but this doesn't seem like a cause for legal remedy]
If I told a customer who absolutely depends on my business to harass/attack somebody, I would certainly hold liable as well.