Feds Shut Down Megaupload
January 20, 2012

Feds Shut Down Megaupload

Megaupload, one of the top file-sharing websites on the internet, was shut down as the US Justice Department and FBI arrested the founder and several company officials.

CEO Kim Dotcom, also known as Kim Schmitz and Mathias Ortmann Chief Technology Officer were arrested in Auckland, New Zealand as well as Bram van der Kolk head of programming and Finn Batato chief marketing officer at the request of the United States government. Julius Bencko, the site´s graphic designer, Sven Echternach head of business development and Andrus Nomm, head of the development software division remain at-large.

Each of the seven employees in the indictment are charged with five counts of copyright infringement and conspiracy. They each could receive up to a maximum of 20 years in prison. The Grand Jury indictment also accuses Megaupload of causing $500 million in damages to copyright owners while making $175 million by selling ads and premium subscriptions.

During the arrest, more than 20 search warrants were executed in the United States and the FBI seized more than $50 million in assets, including many servers and 18 domain names that made up the network of file-sharing sites.

According to the Associated Press (AP), the Megaupload website boasted 150 million registered users with about 50 million hits daily. This amount of web traffic placed Megaupload.com in the top 100 visited websites, generating more than $42 million in revenue for Dotcom in 2010 alone.

Other services operated by Kim Dotcom are MegaPorn, MegaVideo, MegaLive, and MegaPix.

The Justice Department notes that “This action is among the largest criminal copyright cases every brought by the United States. [The action] directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crimes.”

In retaliation for shutting down the file-sharing site, a loose coalition of hackers known as “Anonymous”, took credit for shutting down the Justice Department website. Also the Motion Picture Association of America had their website hacked, although they were back online by Thursday night.

Even though the website hosted users who were sharing copyrighted media, they had celebrity endorsements from Kim Kardashian, Alicia Keys and Kanye West.

The five-count indictment alleges copyright infringement and conspiracy to commit money laundering and racketeering. They are accused of rewarding users who upload content for sharing. They are alleged to have turned a blind eye to requests from copyright holders to remove copyrighted files.

AP's Matthew Barakat reports that users received cash bonuses if they uploaded content that was popular enough to generate great numbers of downloads. Most of the content was copyrighted.

The indictment and arrests came a day after several websites protested against the controversial Stop Online Piracy Acta (SOPA) and the Protect Intellectual Property Act (PIPA).

The US Chamber of Commerce was in favor of tougher laws provided by SOPA. It would have given the government more power in enforcing American Intellectual Property laws around the world.

Critics of the laws can look at these recent arrests and point out that the laws on the books are sufficient to protect the intellectual property of Americans around the world.

Mike McGuire, a media distribution expert from Gartner, told BBC News, “It begs the question that if you can find and arrest people who are suspected to be involved in piracy using existing laws, then why introduce further regulations which are US-only and potentially damaging.”


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