I think it's because of their classification under their licensing in each country...they are not a bank, so they are not obliged to treat account holders as Banks are required to do....and....bank accounts can't be frozen by a bank.....a court order, under various acts has to be served on them first.....Paypal in Australia, introduced the holding of funds, a) to fund chargebacks, and b) in response to the Money Laundering Act, which doesn't entitle them to withhold funds at all......
So...AUSTRAC would be the first port of call if Paypal are still using the Anti Money Laundering legislation (which they have recently been found in breach of), to withhold funds....
I agree with you....they're pirates.....but it is our system and laws that are enabling them to be the loop hole king of the EFT marketplace.....