Friday, January 20, 2012

Why File Share Site Megaupload Was Shut Down

Justice Department Turns Off  Web Sites Having 50 Million Daily Visitors

The U.S. Justice Department and FBI acted this week to shut down and charge with organized crime charges. The company is incorporated in Hong Kong, although it did not operate there.

Law enforcement executed more than 20 search warrants in the United States and eight countries, seizing approximately $50 million in assets and targeted sites where Megaupload has servers in Ashburn, Va., Washington, D.C., the Netherlands and Canada. 

In addition, the U.S. District Court in Alexandria, Va., ordered the seizure of 18 domain names associated with the alleged Mega conspiracy. Megaupload has been reported as among the top three websites for "digital piracy." They reportedly held about four percent of the world's daily internet traffic.

The Department has charged seven individuals and two corporations with running an international organized criminal enterprise saying they are responsible for "massive worldwide online piracy of numerous types of copyrighted works," generating more than $175 million in proceeds from advertising and selling memberships and causing more than half a billion dollars in harm to copyright owners.

As a result, the protest group of internet activist group "Anonymous" shut down for a time the Justice Department and FBI web sites, along with recording and motion picture industry web sites. Users of the sites found them either inaccessible or slow to retrieve pages on Thursday. 

The sites had been previously been blocked in Hong Kong, China, Saudi Arabia, India, and Malaysia.

In a controversy last month involving Megaupload and well known pop performers, a Wikipedia article says, " On December 9, 2011, Megaupload published a music video titled: "The Mega Song", showing artists including Kanye West, Snoop Dogg, Alicia Keys and endorsing the company. 

The music video was also uploaded to YouTube, but was removed following a takedown request by the record company Universal Music Group. Megaupload said that the video contained no infringing content, commenting: "we have signed agreements with every featured artist for this campaign".  The video was later put back on the video site.

Megaupload is accused of allowing public storage and facilitating distribution of intellectual property and copyrighted material, including video and software. The government's action is among the largest copyright cases brought by the United States.

Megaupload Limited and Vestor Limited were indicted by a grand jury in the Eastern District of Virginia on Jan. 5, 2012, and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two counts of criminal copyright infringement.

The companies are operated by Kim Dotcom, aka Kim Schmitz and Kim Tim Jim Vestor, 37, a resident of both Hong Kong and New Zealand, says the indictment.

Also charged: Finn Batato, 38, a citizen and resident of Germany, who is the chief marketing officer;
Julius Bencko, 35, a citizen and resident of Slovakia, who is the graphic designer; Sven Echternach, 39, a citizen and resident of Germany, who is the head of business development; Mathias Ortmann, 40, a citizen of Germany and resident of both Germany and Hong Kong, who is the chief technical officer, co-founder and director; Andrus Nomm, 32, a citizen of Estonia and resident of both Turkey and Estonia, who is a software programmer and head of the development software division; Bram van der Kolk, aka Bramos, 29, a Dutch citizen and resident of both the Netherlands and New Zealand, who oversees programming and the underlying network structure websites.

Dotcom, Batato, Ortmann and van der Kolk were arrested Thursday in Auckland, New Zealand, by New Zealand authorities, who executed provisional arrest warrants requested by the United States. Bencko, Echternach and Nomm remain at large.

The indictment says the companies reproduce and distribute infringing copies of copyrighted works, including movies – often before their theatrical release – music, television programs, electronic books, and business and entertainment software on a massive scale., is advertised as having more than one billion visits to the site, more than 150 million registered users, 50 million daily visitors and accounting for four percent of the total traffic on the Internet.

The sites used third-party linking sites to publicize content so the conspirators did not need to publicize such content on the Megaupload site, thus keeping a low profile. The indictment says they manipulated the perception of content available on their servers by not providing a public search function on the Megaupload site and by not including popular infringing content on the publicly available lists of top content downloaded by its users.

The investigation was initiated and led by the FBI at the National Intellectual Property Rights Coordination Center (IPR Center), from efforts begun by Attorney General Eric Holder's IP Task Force. 

The FBI had assistance from the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. 

Assistance was provided by the New Zealand Police, the Organised and Financial Crime Agency of New Zealand (OFCANZ), the Crown Law Office of New Zealand and the Office of the Solicitor General for New Zealand; Hong Kong Customs and the Hong Kong Department of Justice; the Netherlands Police Agency and the Public Prosecutor’s Office for Serious Fraud and Environmental Crime in Rotterdam; London’s Metropolitan Police Service; Germany’s Bundeskriminalamt and the German Public Prosecutors; and the Royal Canadian Mounted Police – Greater Toronto Area (GTA) Federal Enforcement Section and the Integrated Technological Crime Unit and the Canadian Department of Justice’s International Assistance Group. 

Authorities in the United Kingdom, Australia and the Philippines also provided assistance.

UPDATE: The website for the Justice Department was not operating on Friday afternoon when last tested, and links to news via it's news websites were not working.


  1. Anonymous8:29 AM

    America - world police - kills cloud hosting :¬(

    In America the land of corrupt corporate power , the MPAA & RIAA paid for this action against Megaupload.
    Then America bullied other countries to support their actions.

    Sopa / Pipa and all the other corporate based profit machines like war and healtchcare/drugs, are pushed onto the whole world via corrupt American politicians.

    Next up Blogspot...
    ( Profit V people telling facts )

  2. Anonymous8:50 AM

    Dont give a crap, people get paid too much for there work and we pay to much to buy something that is worth 2 bucks. Maybe when everyone is jobless people might realize that money means nothing... rich can go to hell

  3. Anonymous12:22 PM

    Follow the money....

    Megaupload allegedly receives "proceeds" in total to the tune of around 175 million dollars. If that were profits I'm sure they would say so. So assuming that is revenue, then subtract 50 million for all the equipment, maybe another million for all those company cars, plus the running costs and bandwidth fees for 4% of internet traffic (you can't hosts servers for free!) and what? maybe there's a few million each for the indictees left over?

    Cost of one movie, Spiderman2, 200 million dollars.

    2004 revenues of the big six studios: 36 BILLION dollars.

    Estimate of alleged harm caused by Megaupload: 500 million dollars. (And this is assuming of course that all illegal downloads would be replaced by a legal purchase if the download option were not available - BIG and false assumption!)

    So by stopping Megaupload (and assuming nothing else will rise to take its place - BIG and false assumption!) the copyright manipulators hope for a 1.3% increase in revenue?

    Cost of a 2 year investigation in 8 countries? Cost of extraditions? Cost of running a trial of some 20 people? "Biggest copyright case in history" sounds like MEGAbucks to me.... :)

    Priorities anyone?

  4. Anonymous2:50 PM

    Why not target US equivalents of Megaupload? This is obviously big bucks in membership income alone and one has to question the motives behind this move. If the US only takes down foreign sites, then it is about economic reasons more then anything else.

    Imho sharing files is part of freedom of speech, and it is not up to those who share and use to make a move. It is up to the industry to come up with technology that prevents anything being copied illegaly. And thinking along those lines, why not shut down companies who build mass storage devises like hard drives, or writable cd's/dvd's? These allow for such files to be stored, thus these companies are enablers and a huge part of the problem. Or am I seeing this wrong? Is this maybe why they invented cloud based solutions, so you would depend on others for your own info, probably the same people who can take it down. I.E. Google (amongst others) scans e-mails and everything else you feed it, why should this not be so with your company data? Knowledge is power, and companies like Google keeps scraping for more. Anyway, I'm drifting away from the matter at hand here...

    The question now is, will other filesharing sites be next? If so, who will it be; rapidshare, depositfiles, fileserve, filesonic, filejungle, bitshare, etc... ??? To maintain its credibility, will the FBI take down a US based company next? Or are they above the law, or perhaps protected by US law from such matters, unlike foreign companies.

    Looking forward to their next move.

  5. Austin Hoffman12:59 PM

    That's sad...since it's all BS...SOPA/PIPA were junk + MU arrest was unfair + I don't think swizz he has any legal connections to MU...imo it was all fabbed up to get other celebrity endorsements.

    p.s. looks like someone is pissed - FBI vs ANONYMOUS video:

  6. Anonymous8:31 PM

    People use these sites (at least those that pay) because it is like one stop shopping. The most bang for your buck so to speak. If the media industry could just let go of the old antiquated system of content distribution and purchase on a per item basis we might get somewhere. It's easy. Have levels of service with throughput caps or DL caps. $250/year gets you unlimited access to any content you want. Your consumption gets tracked and royalties distributed accordingly. The more something is accessed the more it earns.