I find it very unlikely that Paypal said this

"Paypal indicated that UnoTelly is not allowed to provide services that enable open and unrestricted Internet access."

That would be Unotelly's interpretation of what Paypal said.

It's most likely Paypal quoted their terms when cancelling their account instead of saying "We hate the open internet"

https://www.paypal.com/nz/webapps/mpp/ua/useragreement-full#10

At least a few of these could easily be being breached by Unotelly

(and note that Paypal doesn't have to prove anything, they have complete discretion about choosing to cut their customers off and end the contract)

10.1 Restricted Activities. In connection with your use of our website, your Account, the PayPal Services, or in the course of your interactions with PayPal, other Users, or third parties, you will not:

 

1. Breach this Agreement, the Commercial Entity Agreement, the Acceptable Use Policy or any other Policy that you have agreed to with PayPal;
2. Violate any law, statute, ordinance, or regulation;
3. Infringe PayPal's or any third party's copyright, patent, trademark, trade secret or other intellectual property rights, or rights of publicity or privacy;
4. Sell counterfeit goods;
5. Act in a manner that is defamatory, trade libelous, threatening or harassing to our employees, agents or other Users;
6. Provide false, inaccurate or misleading Information;
7. Engage in potentially fraudulent or suspicious activity and/or transactions;
8. Refuse to cooperate in an investigation or provide confirmation of your identity or any Information you provide to us;
9. Receive or attempt to receive funds from both PayPal and the Seller, bank or card issuer for the same transaction during the course of a Dispute;
10. Control an Account that is linked to another Account that has engaged in any of these Restricted Activities;
11. Conduct your business or use the PayPal Services in a manner that results in or may result in complaints, Disputes, Claims, Reversals, Chargebacks, fees, fines, penalties and other liability to PayPal, other Users, third parties or you;
12. Have a credit score from a credit reporting agency that indicates a high level of risk associated with your use of the PayPal Services;
13. Use your Account or the PayPal Services in a manner that PayPal, Visa, MasterCard, American Express, Discover or any other electronic funds transfer network reasonably believes to be an abuse of the card system or a violation of card association or network rules;
14. Allow your Account to have a negative balance;
15. Use a credit card with your Account to provide yourself a cash advance (or help others to do so);
16. Access the PayPal Services from a country that is not listed on PayPal's Worldwide page.
17. Disclose or distribute another User's Information to a third party, or use the Information for marketing purposes unless you receive the User’s express consent to do so;
18. Send unsolicited email to a User or use the PayPal Services to collect payments for sending, or assisting in sending, unsolicited email to third parties;
19. Take any action that imposes an unreasonable or disproportionately large load on our infrastructure;
20. Facilitate any viruses, trojan horses, worms or other computer programming routines that may damage, detrimentally interfere with, surreptitiously intercept or expropriate any system, data or Information;
21. Use an anonymizing proxy; use any robot, spider, other automatic device, or manual process to monitor or copy our website without our prior written permission;
22. Use any device, software or routine to bypass our robot exclusion headers, or interfere or attempt to interfere with our website or the PayPal Services; or
23. Take any action that may cause us to lose any of the services from our Internet service providers, payment processors, or other suppliers.

11.3 Actions by PayPal – Restricted Activities. If PayPal, in its sole discretion, believes that you may have engaged in any Restricted Activities, we may take various actions to protect PayPal, Affiliates other Users, other third parties or you from Reversals, Chargebacks, Claims, fees, fines, penalties and any other liability. The actions we may take include but are not limited to the following:

 

1. We may close, suspend, or limit your access to your Account or the PayPal Services;
2. We may suspend your eligibility  for PayPal Buyer Protection and/or PayPal Seller Protection;
3. We may refuse to provide the PayPal Services to you now and in the future; and
4. We may hold your funds for a period of time reasonably needed to protect against the risk of liability to PayPal or a third party, or if we believe that you may be engaging in potentially fraudulent or suspicious activity and/or transactions.