Anyone that has a balance in PayPal is owed money by PayPal. So, any account that does more than just send out funds to other accounts (that is, purchaser-only accounts) is owed money.

Same for a bank. Any customer with an account that's greater than zero is owed money by the bank.

It's not a stretch at all to have a million customers owed money.

My apologies. The excess over your reserve per customer is unlikely to equal the account value per customer. Wait, are paypal under the auspices of the financial regulator? Who approves their reserving methodology?

My spaghetti monster, do they even have to hold a reserve, or can they just spend all your money on the derivatives market?