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Megaupload Shuttered By US Government, Site's Founder Arrested

Posted by: , 14:11 AEDT, Fri January 20, 2012

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Popular file hosting website Megaupload is shut down, with its founder, and others, arrested in a multi-national operation

In a preview of what a post-SOPA world could be like, Federal prosecutors today ordered the closure of Megaupload, one of the web's largest communities, and ordered the arrest of the website's founder, and 3 others, on foreign soil.

Megaupload allows Internet users to upload their own files and share with others, and is one of the most popular services on the Internet, and has even recently received celebrity endorsement

Software developers, office workers, use the service to share large documents that normally wouldn't fit via email, but a sizable percentage of users also use the service to share files they don't have license to. And it's this part of Megaupload's service that has attracted the ire of the music and movie industries, which has repeatedly listed Megaupload as a "notorious website", a list that has also been adopted by Congress.

However, critics argue that Megaupload is also used legitimately, by millions of users, and so following the precedent set by the infamous Betamax Supreme Court decision which found that manufacturers of home recording devices were not liable for the "contributory copyright infringement for the potential uses by its purchasers, because the devices were sold for legitimate purposes and had substantial non-infringing uses." Megaupload's lawyers will most likely also argue that its service is promoted for legitimate use, and it too had substantial non-infringing uses (ie. the ability for users to share legal files).

What could be more worrying for Megaupload's owners is the money laundering charge handed down by a grand jury in the Eastern District of Virginia (Megaupload is based in Hong Kong, but as some of their servers were located in Virginia).

The law enforcement action against Megaupload was in turn a multi-national affair, with the arrest of Megaupload's founder Kim Dotcom in New Zealand, along with 3 others, and the indictment of two more Megaupload personnel as part of the "conspiracy" charge, including Megaupload's Dutch based network engineer. Data centers in the Netherlands, Canada and Washington were also raided, with the FBI also detaining the entire working staff of Megaupload's web host, Cogent Communications, in relation to search warrants. Personal assets of Dotcom were also seized.

Dotcom could face 20 years in prison based on the charge of conspiracy to commit racketeering.


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