Embattled internet mogul Kim Dotcom has experienced another setback after a US court reportedly barred him from fighting the seizure of assets.

Dotcom's lawyer Ira Rothken said today the new order from a US District Court in Virginia was "offensive" to the mogul and to other New Zealanders, who Rothken said could lose their homes if they opposed US Government claims.

Mr Rothken said on Twitter the court in Alexandria, Virginia, just ruled Dotcom was a fugitive and was not entitled "to defend assets because he is lawfully fighting extradition" from New Zealand to the United States.

Dotcom is wanted in America on criminal copyright charges.

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Further comment was being sought from Mr Rothken.

Meanwhile, PayPal has stop processing customer payments for Dotcom's company MEGA.
The company reacted to the news by saying a US Senator pressured Visa and MasterCard to stop dealing with certain cloud computing companies, and alleged the credit card giants in turn pressured PayPal to stop providing payment services to MEGA.

"MEGA supplies cloud storage services to more than 15 million registered customers in more than 200 countries," the company said in a statement. "MEGA will not compromise its end-to-end user controlled encryption model and is proud to not be part of the USA business network that discriminates against legitimate international businesses."

"The obvious assumption here is that Megaupload's controversial past as a service used for pirating copyrighted content has bled over into the new service, simply named Mega, and people are now storing illegal content on its servers," technology website Gizmodo reported.