I guess it was all talk.
Never, ever, keep more than $100 in a paypal account (or as much as you are willing to lose immediately, forever).
Also, if possible, close the bank account your paypal is tied to as they will draw from it as they see fit without your consent.
This situation isn't some innocent trinket seller whose account was frozen without reason and without recourse. It's a foreign national funneling six figures across borders through multiple anonymous PayPal accounts even after being advised, by PayPal directly, to stop doing so. Above and beyond the breach of contract and ignoring PayPal's guidance to stop using a US account when he's not a US citizen or even in the US, the activity looks pretty much exactly like money laundering. On top of that, PayPal has its own legal obligations to the United States, which it can't fulfill since he's not providing a tax ID while he's passed the IRS reporting threshold by a factor of 10.
They closed his US account, which they gave him warning he wasn't supposed to be using. He hasn't claimed they are keeping any of his money, and they didn't stonewall him about why it's being closed. Should they have allowed him to continue operating illegally forever?
My opinion of many people has dimmed as a result of the comments here. They say you can judge a person's character by how well they treat their waiter at a restaurant. In the startup world, how fast someone is to trot out a "PayPal is evil" comment whenever the company is mentioned, no matter the circumstances, might be a decent analogy.
I guess that's like how no-one can imagine cops as abusive and surely the person must have done something to deserve it.
I guess we'll have to wait until you are on the wrong side of paypal and then you can tell yourself you deserved it.
Ask yourself who gets to keep the $200k if he cannot jump through their hoops. Hint: it's not the government.