I agree entirely that they're almost certainly tangential. I generally agree with the line of your argument.

But you're being nasty about Paypal, and I very much doubt the implication. I'll bet you 10:1 that Paypal would rather give him his money. But they also want to be in compliance with the law. They also want to spend the least they can on policy-vio detection and fraud detection ("least they can" means "a hell of a lot", say my professional connections; they're serious about fraud), and the least they can on customer service, and have minimal PR consequences.

It's not like they get to keep the money if they decide it's not legal to move it; they have to give it back, or pass it on. They'd rather pass it on and have more future business, from which they can take their cut. But they won't flagrantly break the law to do it, and they can't spend infinite resources making sure the right thing happens in every single case.

PayPal doesn't give a shit about claiming the money for the government and they damn sure don't care about his immigration status. They just don't want to get ripped off.

As I said, if lawyers get involved Paypal will care very much about his immigration status. If his visa doesn't allow making money while in the US, he's just handed Paypal's counsel a very big stick with which to make him go away.