FBI closes Megaupload, extradites owners from NZ

The US government has closed file sharing site Megaupload, charging owners and employees with huge copyright infringement and extraditing them from their New Zealand base.

Seventy police raided ten properties, arresting the site's founder and several executives, seizing extensive physical and property assets and $8 million from banking institutions. The group stands accused of making more than $175 million from illegal activities and denying copyright owners more than $500 million in revenues.

A statement issued by the FBI regarding the operation details the charges and potential ramifications for the accused.

"The individuals and two corporations - 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 substantive counts of criminal copyright infringement.

"The individuals each face a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering and five years in prison on each of the substantive charges of criminal copyright infringement."

Megaupload had operated by allowing users to upload files, largely music and video, which could then be downloaded by others from a uniquely generated URL. By paying a fee, users could become premium members and increase their download speeds - Megaupload's main source of income.

The site also had considerable revenues from its advertising inventory.

"The FBI contacted New Zealand Police in early 2011 with a request to assist with their investigation into the Mega Conspiracy," said DI Grant Wormald of New Zealand's Organised & Financial Crime Agency.

"All the accused have been indicted in the United States. We will continue to work with the U.S. authorities to assist with the extradition proceedings,"

"We have nothing to hide," said site founder and owner Kim Dotcom, A.K.A. Kim Schmidt. A statement issued before the site was taken offline also asserted that the vast majority of the site's business was entirely legitimate.

Shortly after the closure and arrests, someone purporting to be from notorious hacktivist collective Anonymous posted a tweet reading: "The government takes down Megaupload? 15 minutes later Anonymous takes down government & record label sites."

The US Department of Justice's public site came under a massive denial of service attack at around the same time, as did the sites of Universal Music and the MPAA, both vocal public supporters of the SOPA bill and anti-piracy actions on the whole.

The Recording Industry Association of America (RIAA) and the U.S. Copyright Office were also attacked. Sources from Anonymous said it had been the group's largest action yet.

Whilst neither the police operation nor the retaliations are directly linked to the recent discussions and protests surrounding SOPA and PIPA, it seems highly unlikely that the timing of the actions was entirely coincidental.