It looks like PayPal has stopped doing business with domain name registrar Epik. A member at Namepros noticed they could not use PayPal and thought it was a glitch.
Rob Davis replied writing a series of letters that are very well written addressing Paypal executives.
You can follow this link and read all the correspondence Epik has sent out to the company.
This decision by PayPal just seems wrong in my opinion without any proof of wrong doing or allowing for an appeal. In the letters it was noted that PayPal determined that they would no longer provide services to Epik due to service risk. A business decision has been made to no longer process transactions on your behalf.