Authorities in several countries, led by the U.S. Federal Bureau of Investigation, acted Thursday to shut down Megaupload Ltd. and arrest several of the people involved in its operation. This is the first major anti-piracy action taken against a cloud storage service, which the Motion Picture Association of America and others content are hotbeds of piracy.
Megaupload Ltd. is based in Hong Kong, and four of its key people were arrested in Auckland, New Zealand, on five charges related to conspiracy to commit racketeering, money laundring and criminal copyright infringement. U.S. authorities contend Megaupload, with 150 million registered users worldwide, generated more than $175 million in criminal proceeds and caused more than half a billion dollars in harm to copyright owners.
The arrests were carried out by the Organised & Financial Crime Agency New Zealand (OFCANZ) and New Zealand Police following a U.S. request to arrest individuals for the purpose of extradition.
U.S. prosecuters said it had jurisdiction to act since Megaupload hosted and stored content on leased servers in Virginia.
Kanye West, Alicia Keys and even Kim Kardashian have publicly endorsed Megaupload for legitmate uses. The service’s business model is to offer a basic level of storage and downloading for free, with faster speeds and larger lockers available for a monthly premium. Megaupload also carried advertising on its website.
Kim Dotcom, Megaupload’s former chief executive officer and current chief innovation officer, was one of the four arrested in New Zealand. He is a resident of Hong Kong and New Zealand and a dual citizen of Finland and Germany who had his name legally changed. Two other German citizens and one Dutch citizen also were arrested. Three other defendants – one each from Germany, Slovakia and Estonia have not yet been apprehended.
A short time previously, Megaupload had a message on its landing page that said in part, “The fact is that the vast majority of Mega’s Internet traffic is legitimate, and we are here to stay. If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch.”
New Zealand police spokesman Grant Ogilvie said significant property was confiscated as part of the action, including: $8 million that had been invested in various New Zealand financial institutions; a Rolls Royce Phantom Drophead Coupe, a pink 1959 Cadillac convertible and other vehicles; two short-barreled shotguns; and a number of valuable artworks.
Chris Dodd, MPAA chairman and chief executive officer, said: “This criminal case, more than two years in development, shows that law enforcement can take strong action to protect American intellectual property stolen through sites housed in the United States.”
Cary Sherman, Recording Industry Association of America chairman and chief executive officer, said the RIAA was “deeply grateful” for the legal action. The statement added, “The indictment outlines a sinister scheme to generate massive profits through the distribution of the stolen intellectual property of others.”
The Electronic Frontier Foundation, an online freedom advocacy group, said in a statement that the indictments set “a terrifying precedent,” adding “If the United States can seize a Dutch citizen in New Zealand over a copyright claim, what is next?”
Sky News (Australia) – Megaupload accused front NZ court
New Zealand Times – Copyright accused denied bail
Wall Street Journal – U.S. Shuts Offshore File-Share ‘Locker’
Associated Press – US Internet piracy case brings New Zealand arrests
Deutsche Welle – US shuts down popular file-sharing site
Politico – Megaupload shut down over piracy violationsImage courtesy of BPI (British Recorded Music Industry) Ltd.