New Zealand authorities, at the request of a provisional arrest warrants by the United States, arrested four of seven leaders in the Megaupload conspiracy on charges that it illegally shared movies, television shows and e-books yesterday, January 19.
Along with the arrests, law enforcement worldwide executed search warrants in the United States and 8 other countries where Megaupload servers were located, shutting down 18 domains linked to Megaupload and seizing more than $50 million in assets.
According to an official release by the Department of Justice (DOJ), the arrests and seizures were part of a federal indictment accusing the company of running an international criminal organization dedicated to piracy. In the indictment, the Megaupload’s executives were accused of taking in an excess of $175 million worth of subscriptions while causing well over $500 million in damages and losses to copyright holders.
In response to the news of Megaupload’s seizure, self-proclaimed Internet warriors, the hacking group Anonymous, launched a Distributed Denial of Service (DDoS) attack on various sites linked with the indictment. Within the hour, Anonymous had overwhelmed the websites of the DOJ, the Federal Bureau of Investigation (FBI), the Motion Picture Association of America (MPAA), the Recording Industry Association of America (RIAA) and the Universal Music Group (UMG).
“The government takes down Megaupload?” Anonymous said in a tweet. “15 minutes later, Anonymous takes down government [and] record label sites.”
Megaupload is an online Hong Kong-based company that runs a one-click hosting service of the same name, along with its sister services. In the indictment, the DOJ and FBI accused the corporation of setting up a business model based on supporting piracy and discouraging any legitimate activity.
“The conspirators conducted their illegal operation using a business model expressly designed to promote uploading of the most popular copyrighted works for many millions of users to download,” the DOJ’s indictment said. “The site was structured to discourage the vast majority of its users from using Megaupload for long-term or personal storage by automatically deleting content that was not regularly downloaded.”
The indictment also attacked Megaupload’s reward system, alleging that it supplied users with a financial incentive to upload popular content and increase web traffic towards the site. According to the indictment, Megaupload has grown to accumulate roughly 4 percent of all web traffic or more than one billion visits daily.
In response to these charges, Megaupload heads denied allegations of intentional copyright violation. Moments before having their servers shut down, Megaupload posted an online statement calling the charges “grotesquely overblown.”
However, when the four arrested heads of Megaupload, including Founder and Chief Executive Officer Kim Schmitz, Chief Marketing Officer Finn Batato, Chief Technical Officer Mathias Ortmann and overseer Bram van der Kolk, arrive in federal court, they will be represented by defense attorney Robert Bennett, who is famed for representing Bill Clinton against sexual harassment charges and Enron against allegations of corporate fraud.
“We intend to vigorously defend against these charges,” Bennett said.
While their official servers have been shut down, Megaupload, in protest of these charges, are on route to re-establishing their servers through the use of an IP address.
“If the United States can seize a Dutch citizen in New Zealand over a copyright claim, what is next?” the international non-profit digital rights advocacy and legal organization, Electronic Frontier Foundation, said in an online statement.
Relevant links include Megaupload’s new website, the official DOJ release and
Anonymous’ Twitter post.
