MegaUpload Shut Down by Feds, Kim Dotcom Arrested

Several other employees have been arrested and assets seized

By on January 20th, 2012 10:14 GMT

Mega file-sharing and hosting site MegaUpload is dead, at least for now. In a coordinated effort, law enforcement authorities have seized several domains belonging to the company, raided data centers that were hosting the sits and arrested several employees. Authorities also seized goods and bank accounts belonging to the company and its employees.

Authorities, based on numbers coming from the entertainment industry, say the site caused more than $500 million, €388 million in 'lost revenue' - an esoteric concept. They also said the company made $175 million, €136 million from its illegal activities.

The sites founder, the notorious Kim Schmitz, also known as Kim Dotcom, was arrested in New Zealand, where he lives, along with four other employees. The police is looking for three more employees and have warrants for their arrests.

They are being charged with conspiracy to commit racketeering, conspiracy to commit copyright infringement, conspiracy to commit money laundering and with criminal copyright infringement.

Several domains belonging to Megaupload Limited were seized, the sites are currently unavailable. What's more, police raided data centers in three countries and seized equipment there.

It also confiscated assets belonging to Kim Dotcom, the company and the other employees worth some $50 million, €39 million, including a couple of dozen luxury cars.

Megaupload is one of the biggest websites in the world, so its downfall will be noticed. Doubtless, the myriad of other cyberlocker sites will move to take its place. People may even start moving back to BitTorrent. At the same time, other cloud file-sharing services, like Dropbox, may also benefit.

The timing of the raid is interesting, it comes just a day after the internet was involved in one of its biggest coordinated protests yet, against SOPA, a law that would make things like taking down Megaupload a lot easier for copyright holders, without the need for the FBI or police forces to get involved.

While authorities and entertainment lobbying groups say it is a coincidence, taking down one of the largest websites in the world does not shine any good light on their cause and certainly doesn't help convince people of the threat of "pirates" even if MegaUpload turns out to be guilty of everything.

The move also comes after MegaUpload sued Universal Music Group for taking down one of its promotional YouTube videos, which included several artists represented by UMG. Those artists appeared in the video at the request of famed hip-hop producer Swizz Beats who was revealed to be the CEO of MegaUpload. There don't seem to be any charges against him.

Meanwhile, Anonymous has spurred into action and is taking down government and law enforcement sites as well as those belonging to movie studios, record labels and their trade organizations.

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