Four MegaUpload execs arrested, Anonymous responds

Popular file-sharing company shut down by US Justice Dept., prompting biggest ever Anonymous attack

If you thought the copyright battles had reached a fever pitch with the SOPA/PIPA protests, you'd be dead wrong...

The day after a widely publicized Web protest of the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA), the US Justice Department arrested four operators and company executives of popular file-sharing company MegaUpload.

MegaUpload founder Kim Dotcom, also known as Kim Schwartz, chief marketing officer Finn Batato, CTO and co-founder Mathias Ortmann, and Bram van der Kolk were arrested in Auckland, New Zealand. Dotcom, Batato, and Ortmann are German nationals with New Zealand citizenship, while van der Kolk is Dutch national. Kim Dotcom owns 68 percent of MegUpload, and made a reported $42 million in 2010.

They were indicted on counts of copyright infringement, conspiracy to commit copyright infringement, conspiracy to money laundering, and conspiracy to racketeering. If found guilty and given maximum sentences, each could face over 20 years in prison.

The indictment has claimed that MegaUplaod took in over $100 million over a span of five years, from premium membership fees and other payments. The company has over 30 employees, living in 9 countries. MegaUpload was hosted mostly in Virginia, through a provider called Carpathia Hosting. The second biggest MegaUplaod host was through a company in the Netherlands, Leaseweb.

The MegaUpload executives are being indicted under the PRO-IP Act of 2008.

As to the timing, a DOJ official has stated that the arrests had nothing to do with the deliberation of SOPA or PIPA or the recent Web protest by such sites as Wikipedia, Reddit, BoingBoing, and others. Several reports have already questioned whether the timing illustrates that the US government, in fact, doesn't need to pass SOPA/PIPA to crack down on copyright infringers. An FBI investigation of MegaUpload and Kim Dotcom reportedly had been ongoing for the past two years.

US and New Zealand police have seized upwards of $175 million in assets in 64 bank accounts around the world, as well as a large collection of Dotcom's possessions, including automobiles, gadgets, and computer servers. Arguably the most popular of them, MegaVideo, is currently offline.

MegaUpload functioned by allowing users tp upload copyrighted film, television, or music files. Other users could then find these files and either upload them or stream them, either on free or premium accounts. The company claimed "more than 150 million registered users, 50 million daily visitors and accounting for four percent of the total traffic on the Internet," according to a DOJ statement.

When news of MegaUpload's takedown broke, many were surprised to learn that hip-hop producer, NYU professor, and husband to singer Alicia Keys, Kaseem Dean also known as Swizz Beatz, may be the company's CEO, though this fact has also been disputed. He was not indicted, nor was his name found in any court filings.

MegaUpload posted a statement, just before the site was taken down. "The fact is that the vast majority of Mega's Internet traffic is legitimate, and we are here to stay. 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," said the company in their statement.

"This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime," said the US Justice Department, in their own statement.

And if all that wasn't enough craziness for you, the infamous Web activist group known as Anonymous sprang into action soon after the MegaUpload execs were arrested.

Anonymous hacked and shut down the public websites of the US Justice Department, the Motion Pictures Association of America (MPAA), the Record Industry Association of America (RIAA), Universal Music Group, the US Copyright Office, EMI Music, the Federal Bureau of Investigation (FBI), among others.

Friday's actions by Anonymous are being called the largest coordinated attack in the group's history.

"Popular file-sharing website megaupload.com gets shutdown by U.S Justice - FBI and charged its founder with violating piracy laws. Four Megaupload members were also arrested... We Anonymous are launching our largest attack ever on government and music industry sites. Lulz. The FBI didn't think they would get away with this did they? They should have expected us," said the group in its statement.

[Image Credit: CNet.com]