PayPal has locked it of its account and frozen a portion of its development budget. Chris England, project lead on Xenonauts, explains his trouble with PayPal on the official Xenonauts blog:
[...]currently our Paypal account has been locked down and closed, so we don't have access to any of the new money coming in or any access to the funds currently in the account. As a result of this, we've temporarily disabled the pre-order page.This seems to be the same kind of problem that Minecraft and Project Zomboid have had in the past. All of these games have a business model that allows gamers to invest in the development of the game by taking pre-orders for access to early builds and eventually the finished product. The payment service is taking issue with money changing hands without an actual released product being sold. Paypal's policy in these cases is to sit on the money for 180 days and then either give the money to their rightful owner or refund the people that have pre-orders.
It’s seems a bit harsh to make people running a legitimate business model wait six months for funds that can be put to good use. They are aiming to release the game within those six months and Chris just quit his job and is using his savings to be able to work full-time on the game. Needless to say this must be most inconvenient for the developer but he says they are still aiming to finish the game on time, though the project may still suffer.
Whether we'll be able to implement all the 'nice-to-have' features on that budget (such as our new UI style) remains to be seen, but we'll be able to complete it to the original spec on the funds we currently have. So, no need to worry about the future of the project.The game is starting to look very good as evidenced by its showing at Eurogamer Expo and we will let you know what we think as soon as we get our hands on it.