Yatagarasu Attack on Cataclysm dev's funds unfrozen by PayPal

The developers of Yatagarasu Attack on Cataclysm, a 2D fighting game from former members of the King of Fighters dev team, can breathe a sigh of relief today, as the money the studio raised earlier this year to finish the title has been unfrozen by PayPal.

The game worked its way through Indiegogo during the summer in a campaign that raised $118,243 — well above publisher Nyu Media's $68,000 goal. Last night, the studio revealed that PayPal was "reserving" the funds raised in the campaign, only promising to release up to 50 percent before the final game launched during its expected Feb. 2014 release window. The other half would be distributed to the studio even closer to the title's launch. Today, Nyu Media announced that decision had been reversed.

"I'm relieved to announce that today we received an email from PayPal's ‘Office of Executive Escalations', advising us that they have released all reserve funds and removed all reserve settings from our account," Nyu Media founder Seon King wrote on the game's Indiegogo blog. "This comes as a HUGE relief for all involved in the development of Yatagarasu AoC, as the money raised by our contributors is vital to the game development and pursuing alternative arrangements at this timing would have been hugely problematic."

King added a special thanks to everyone who contacted PayPal or otherwise wrote about Nyu Media's plight to get the decision reversed.

The outcome is somewhat less punishing than a similar hold PayPal applied to the crowdfunding campaign for Skullgirls DLC earlier this year. After freezing developer Lab Zero's account — preventing the studio's staff from being paid — the two parties resolved the dispute; however, PayPal reserved $35,000 of their funds "as collateral," according to Lab Zero CEO Peter Bartholow.

The original game, Yatagarasu, is being ported to PlayStation Vita by Nicalis in North America, where it will carry the new title Legend of Raven.

Update: A representative for PayPal sent a statement to Polygon about this issue, stating that interfering with the goals of companies who use their service is not their intention, and that the company is continuing to change their policies to avoid friction in the future.

"We have reached out to Nyu Media and the issue has been resolved," the representative wrote. "We want to reiterate that supporting these campaigns is an exciting new part of our business. We are working closely with industry-leaders like IndieGoGo and adapting our processes and policies to better serve the innovative companies that are relying on PayPal and crowd funding campaigns to grow their businesses.

"We never want to get in the way of innovation, but as a global payments company we must ensure the payments flowing through our system around the world are in compliance with laws and regulations. We understand that the way in which we are complying to these rules can be frustrating in some cases and we've made significant changes in North America to adapt to the unique needs of crowd funding campaigns. We are currently working to roll these improvements out around the world."

Correction: An earlier version of this article referred to Nyu Media as the game's developer. PDW:HOTAPEN is the game's developer, while Nyu Media is handling localization and publishing duties. Additionally, Attack on Cataclysm is not being ported to PlayStation Vita as Legend of Raven.