Police shut down Megaupload sites

New Zealand Police this morning arrested four executives in a major international operation that shut down file-sharing service Megaupload and its affiliate Megavideo.com.

The arrests took place at the request of the FBI and US Justice Department (DoJ), which laid charges against seven people in one of the largest criminal copyright cases ever filed in the United States.

Hacker group Anonymous condemned the shutdown and immediately launched 'OpMegaupload', taking down the websites of the DoJ, Motion Picture Association of America, Record Industry Association of America and Universal Music in retaliation.

Anonymous claimed in a tweet a short time ago that more than 5600 people participated in retaliatory website attacks.

US authorities alleged that those arrested had caused more than $A480 million in damage to copyright owners while generating more than $168 million in "criminal proceeds" for themselves.

The proceeds were allegedly received through advertising and the sale of premium memberships that enabled users of the sites to avoid time limits for viewing uploaded content.

Megaupload founder Kim Schmitz, 37, was among those arrested in Auckland. Schmitz is also known as Kim Dotcom, Kimble and Kim Tim Jim Vestor.

Also arrested were the site's CTO Mathias Ortmann, 40, programmer and network engineer Bram van der Kolk, 29 and chief marketing officer Finn Batato, 38.

All will appear in the North Shore District Court this afternoon.

Three other people allegedly connected with Megaupload, including its head of software development, remain at large.

New Zealand IP lawyer Rick Shera reported on his Twitter feed that police had blocked all entrances to Schmitz's $23 million mansion this morning.

Auckland Police said they had seized $4.6 million of assets, including a Rolls Royce Phantom Drophead coupe.

In addition, $7.7 million in cash was seized from financial institutions in New Zealand, pending the outcome of legal proceedings.

Authorities across the globe seized $48 million in assets in coordinated raids. Among the items seized are servers in the United States, Canada and The Netherlands and 18 domain names.

Unnamed authorities in Australia are said to have provided assistance to the investigation.

The FBI alleged Megaupload's business model explicitly encouraged internet piracy by paying users "whom they specifically knew uploaded infringing content" and by "actively supporting" third-party sites that linked to and publicised the files.

It is also alleged that when rights holders advised the company of allegedly pirated material, Megaupload did not remove it as requested.