Four members of the Anonymous collective, one as young as 18, allegedly targeted the online transaction company with distributed denial of service attacks, under the banner ‘Operation Payback’.
However, the campaign had begun months before in response to a growing anti-piracy lobby, which had tried to shut down The Pirate Bay.
One of the gang ‘suggested attacking the website of Lily Allen, in retaliation to her stance on anti-piracy’, prosecutor Sandip Patel said at the trial of one of the ‘hackers’, Christopher Weatherhead, 22.
Anyone who tried to visit sites under attack was directed to a page with the message: ‘You’ve tried to bite the Anonymous hand. You angered the hive and now you are being stung’.
Weatherhead – who used the online nickname ‘nerdo’ – was a one of a ‘small cabal of leaders’ in Anonymous, jurors heard.
Mr Patel said the cyber attackers ‘waged a sophisticated and orchestrated campaign of online attacks that caused unprecedented harm’.
He added Weatherhead posted plans on an Internet Relay Chat channel encouraging an attack on PayPal, saying hackers should ‘reap’ – thought to mean ‘rape’ – the online payments company.
Mr Patel said PayPal was forced to buy new software and hardware which, added to a loss of trade, cost it £3.5million.
Northampton University student Weatherhead is also alleged to have taken part in attacks on other sites including MasterCard, Visa, Ministry of Sound and the British Recorded Music Industry.
He denies a charge of conspiracy to impair the operation of computers between August 2010 and January 2011.
Ashley Rhodes, 28, Peter Gibson, 24, and an 18-year-old, who cannot be named, have already admitted their roles in the conspiracy.
The trial at Southwark crown court in London is expected to last two weeks.
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