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This problem is caused by the NSS security fix for CVE-2011-3389. There is an ongoing discussion how this fix affects SSL connections to various SSL servers. Setting the environment variable NSS_SSL_CBC_RANDOM_IV=0
when running Pidgin fixes the problem:
$ export NSS_SSL_CBC_RANDOM_IV=0 $ pidgin $ NSS_SSL_CBC_RANDOM_IV=0 pidgin
UPDATE Nov-2012: it seems that Microsoft has finally fixed their SSL code. Connection to an Office 365 account now works also with this variable set to 1, i.e. enabling the NSS security fix by hand.
UPDATE Feb-2013: Pidgin project has updated their NSS package for the Windows Pidgin build to 3.13.6. Thus Windows users are now also experiencing this problem.