This moral policing by businesses is bad for society - and lets businesses dictate more than they ought to be able to.
For example, if an industry has a humongous chargeback and fraud rate, then they become unprofitable and get dropped. This is why American Express stopped allowing porn (there was news articles about it at the time and they went on record saying massive amounts of chargebacks and fraud from porn sites were solely the reasons). American Express and Visa also don't allow you to use you to use your credit card to pay your mortgage (Mastercard does). I don't know the reasons why, but I'm sure it's not arbitrary.
They also have to conform to laws and regulations. This is an offshore company, PayPal is based in the United States. I don't know if its legal to sell this sort of spamware-as-a-service in the United States, but I think there might be AT LEAST copyright issues content harvesting that they appear to be doing (based on other comments).
These are businesses, not charities.
It's not just that: these are businesses, not the government. A lot of free-speech advocates and libertarian thinkers seem to think somehow that private businesses somehow have a responsibility to uphold free speech, and they simply don't. It's the government that can't restrict you from free speech (in the USA); but companies don't have to put up with it on their property or when using their service.
There's a simple saying about free speech: I'll respect your right to free speech, but I'm not going to provide a podium for you. If you want to speak freely, you can go to any street corner and do so, but don't expect my company to provide a platform for you if I don't agree with your views.
PayPal just needs to be more clear/transparent about that.
I also think it's ridiculous to suggest that we should drastically increase the number of laws so that everything bad is explicitly illegal. Drugs are a great example. Can they cause a lot of harm? Sure. But the war on drugs has caused immense harm as well. Decriminalization and regulation are the right approach. But if that happens it still doesn't mean that PayPal (or anybody) should be required to participate in the drug business.
They are, but we are free to be mad at them when they do this in assine ways, as we are free to also decide not to associate with businesses that excessively invoke their freedom of association, for either reliability reasons (businesses that cut ties over ever changing reasons are not a reliable company to do business with) , or ideological ones (we don't like why they are invoking the right).
PayPal is a private company. They do have business in regulating what types of customers they'd like to serve, and they are well-within their rights to create and enforce their own terms of use.
Certain types of customers (scammers, spammers, etc) are a greater liability and can end up causing more issues (and less revenue) than they are worth, so it makes perfect sense for PayPal to choose not to do business with them.
This is industry-wide policy and is mandated by the brand (Visa/Mastercard/etc.) Sometimes a brand will enforce a payment processor to suspend a merchant account because of violations. In case of a payment facilitator (like PayPal), failing to comply would result in suspension of payment processor's master account.
Even Stripe (which I believe is a PSP) prohibits some business from using their platform[1] (although Stripe is willing convince brand/acquirer on behalf of a merchant if they have compelling reasons).
[1]: https://stripe.com/blog/why-some-businesses-arent-allowed
Companies aren't the government, and are allowed to choose who they want to do business with. They don't have a responsibility to uphold free speech, and only have to make sure they don't discriminate based on protected class (race, sex, etc.). Otherwise, if they don't want to be known as "the company that helps neo-Nazis accept payments" or something like that, they're free to not do business with them.