That could be due to two things.
- Please make sure that paypal IPN is set up correct as follows http://yourdomainname.com/ipn
- If that doesn't work, it could be due to the fact that your server cannot validate SSL certificate. Open the file includes/library/paypal.class.php and go to line 96 to find the code below and replace true by false
curl_setopt($ch, CURLOPT_SSL_VERIFYPEER, true);