Megaupload shutdown, founder arrested

Massive file sharing website Megaupload has been shut down following the arrest of founder Kim Dotcom on copyright infringement charges.

Dotcom, also known as Kim Schmitz, was arrested in New Zealand where he rented a multimillion-dollar mansion following a co-ordinated bust lead by the FBI.

Three other executives were arrested in the Auckland area, and a further three remain at large.

New Zealand police raided 10 properties seizing $NZ10 million ($A7.7 million) in cash and $NZ6 million ($A4.6 million) worth of vehicles, weapons and artwork.

Dotcom awaits extradition to the US.

Megaupload was one of the most popular online file-sharing websites and was used extensively for distributing pirate and illicit content, prosecutors said.

A US indictment issued today said Megaupload cost copyright holders some $US500 million ($A480 million) in lost revenue from pirate content and generated $US175 million ($A168 million) in criminal proceeds.

The website generated more than $42 million ($A40 million) in revenue in 2010 from advertising and subscription services that offer customers faster download speeds, according to the indictment

The individuals were indicted by a grand jury on 5 January and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering, and two substantive counts of criminal copyright infringement.

Megaupload said in a statement most of its internet traffic was legitimate.

“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."

The takedown provoked immediate denial of service attacks by the online collective Anonymous targeting the US Department of Justice the US Copyright Office and Universal Music.

Dotcom and law enforcement

Besides Kim Dotcom, others charged in connection with the piracy bust include: Megaupload co-founder and director Mathias Ortmann; chief marketing officer Finn Batato; business development head Sven Echternach; lead software developer Andrus Nomm; programming and network head Bram van der Kolk; and graphic designer Julius Bencko.

Dotcom has engaged in a long-running battle with copyright holders over alleged pirate content hosted on Megaupload.

Last month, Universal Music lost its bid to have a music clip dubbed "the Mega Upload Mega song" created by major US artists removed from YouTube on the grounds of copyright infringement.

In 2001, German authorities charged Dotcom with insider trading and embezzlement in what was the largest case of its kind in the country.

Dotcom was fined €100,000 ($A124,000) and received a combined three year and eight month probationary sentence after he purchased $US375,000 ($A360,000) worth of shares in a failing company before announcing plans to invest a further €50 million ($A62 million).

He sold his shares for a profit of $US1.5 million ($A1.4 million) after stocks jumped by some 300 per cent.

Dotcom led a flamboyant lifestyle, appearing on German television talk shows and once 'winning'  the European Gumball race in his luxury sportcar.

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