I don't know who you are or where you were but the paypal problems were pretty well announced and _I_ was there. The project was already facing delays because a key person who was needed to make the board layouts was held up with the also now dead DragonBox Pyra handheld.
I have no idea where you think the money went, how much you think there was, but it was a constant game of trying to drum up enough activity to gain attention of potential customers to bring in enough down-payments to pay the salaries of the small number of people working on the project while having enough money to buy parts. The money went into salaries, parts, nobody bought hookers or blow with it, and certainly nobody got anything but stress out of that project in the end. I believe Joerg Reisenweber paid a lawyer out of pocket to try to get PayPal to release the funds.
If there was actually a holdup of funds that killed the project, and eventually the funds were released, that's an even worse story. I didn't think there could be a worse story. It would mean that the project fell apart while they were waiting on cash, then when they got it they just treated it like a personal windfall. IIRC I ended up out $1.5K on the thing.