Kim Dotcom stands before a New Zealand court facing on Friday. Image is from a screen capture of 3News.co.nzOne of the world's biggest file-sharing websites, Megaupload, has been shut down today. Its German-born but New Zealand-based founder, Kim Dotcom (37), was arrested along with three others in Auckland.
The FBI's list of those arrested includes another New Zealand resident, Bram van der Kolk (29).
Van der Kolk, along with two others on the list, Finn Batato (38) and Mathias Ortmann (40), was also arrested in Auckland overnight.
The charges levelled at Dotcom and others are: engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering, and two substantive counts of criminal copyright infringement.
The FBI has issued a press release which claims that Megaupload had generated more than $175 million in "criminal proceeds".
(See Related: What Megaupload's Demise Teaches about Cloud Storage)
The FBI said law enforcement had executed more than 20 search warrants in the US, New Zealand and seven other countries, and seized more than US$50 million in assets.
"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," the statement said.
Megaupload, Megavideo, MegaLive and MegaPorn are all offline this morning, New Zealand time.
Shortly before the shutdown Megaupload released a statement to say that "the vast majority of Mega's internet traffic is legitimate, and we are here to stay".
Kim Dotcom with friend from an image posted to his Facebook pageThe statement also said the company was happy to work with "the content industry" on a solution.
Dotcom, who had his name legally changed from Schmitz, has recently courted controversy when Megaupload hired a bevy of celebrities to make a music video about the website. The video featured Will.i.am, Kim Kardashian, and Alicia Keys.
The Universal Music Group had the video taken down from YouTube, despite having no claim to the content.
Accused appear in court
The four Auckland-based men arrested in relation to the Megaupload case have appeared in the North Shore District Court this afternoon.
The Judge understood the defendants were opposed to photography and filming. However Megaupload founder Kim Dotcom interjected to say he and the other defendants had no problems with filming, photography, or other coverage of the case.
"We have nothing to hide," he said.
Bail applications will be dealt with on Monday morning, the Judge said. The accused have been remanded in custody until then. Lawyers acting for the US government were opposed to bail for all of the four defendants.
Kim Dotcom in undated photo courtesy of TorrentFreak.comNew Zealand police: 10 search warrants issued, no intention to charge under New Zealand laws
The New Zealand police released a statement regarding the Megaupload arrests today.
The press release said that the arrests were carried out by the Organised & Financial Crime Agency New Zealand (OFCANZ) and New Zealand Police, following "a mutual legal assistance request" from the United States.
The release said the people arrested were at addresses in Coatesville and Orakei.
"A total of 10 search warrants were executed at residential and business addresses across Auckland," the police said.
"The FBI contacted New Zealand Police in early 2011 with a request to assist with their investigation into the Mega Conspiracy," said detective inspector Grant Wormald.
"We were happy to provide this assistance. Staff from OFCANZ and New Zealand Police have worked with the US authorities over recent months to effect today's successful operation."
"All the accused have been indicted in the United States. We will continue to work with the US authorities to assist with the extradition proceedings," Wormald said.
The police said assets that have been seized include luxury cars with a total value of NZ$6 million. Over NZ$10 million has also been seized from local financial institutions.
At the police press briefing this afternoon, detective inspector Grant Wormald gave us only a small amount of information that we didn't already know.
DI Wormald said he had been personally involved since August last year, after being contacted by the FBI and asked for assistance. He acknowledged that the work done by the FBI and his own team on the complex investigation was excellent.
He was unable to give details of financial institutions being investigated for assets relating to the investigation.
What is apparent is the New Zealand Police have done what they can to stay out of the way of the FBI's leading role.
DI Wormald made it clear that the New Zealand portion of the investigation was part of an ongoing investigation spanning the globe.
When asked whether those arrested had breached New Zealand copyright laws, he said: "I think it's more than likely that they have. Can't say that with surety."
He also said that those arrested were unlikely to be charged under New Zealand laws. "We're investigating the scene," he said, "but there's no intention to [charge them under New Zealand laws]."
PC World asked what would happen with any computer equipment seized at the premises being searched and DI Wormald said it would be inventoried to Crown Law, which would liaise with the US Department of Justice to decide what would happen to any computer equipment.
Indictment against Megaupload
The indictment against Megaupload has been released online.
As we understand it, the grounds for the indictment are charges of racketeering, money laundering and copyright infringement, dependant on several factors.
The claimants say that Megaupload's limit of 72 minutes of video for non-premium users pushes people towards premium subscriptions in order to watch infringing copies of major-release films (which are generally longer than 72 minutes). Premium subscribers are presented with ads, which form a revenue stream for Megaupload, as do the premium subscriptions. These form the basis for the money laundering portion of the claim.
The claimants also say that the abuse reporting tool for Megaupload does not work, since it removes the URLS and ability to search for infringing material, but does not remove the infringing copy itself.
A search warrant in 2010 found 34 infringing copies of movies on a Megaupload server.
Anonymous takes down government, industry and police websites
Activist hacker group Anonymous has reportedly taken down the websites of the US Department of Justice, Universal Music, the New Zealand police, the RIAA, and the MPAA in retaliation for the Megaupload shutdown and arrests.
Anonymous said the attack was "the largest on scale attack ever by Anonymous".
RIP Megavideo
I don't condone sites of this kind... but I understand why the arise. We're obviously paying WAY too much for entertainment, a few episodes of mtv cribs will drive that point home. First Netflix, now Megavideo... completely different cirucmstance I know, but sounds like online media peddling is turning into the new risky business none the less.
Been following this all day at work
One of the interesting things being reported is that Anon is pushing out their DDOS tool through phishing attacks and otherwise legitimate websites that they've compromised - tricking unknowing users into becoming part of their attack platform. If true this is a fairly major change for them - previously you had to voluntarily download and install their tool. A few places are commenting that this fundamentally changes them from a group of common minded hactivists into standard bot-net operators. I don't think that legally the distintion is signifigant - they're both equally illegal. But this may turn off quite a few followers who used to (at least idealogically) agree with them and what they did.
I've heard two thoughts as to why they'd make this change. 1) they just didn't have enough followers to pull off simultaneous attacks against so many targets. 2) this does give any of their followers a plausable deniability as to how the tool may have gotten onto their machine. A DDOS attack isn't too hard to start tracking down where it came from - with the quantity of them that have been going on lately, the dept of Justice is getting lots of practice.
But for all the attention this type of stuff gets, it's really just a lot of hot air. Taking FBI.gov offline for a few hours is probably something that no one would have even noticed if it wasn't the twitter feeds and press releases saying they did it.
Megaupload.
Yeah, this guy was basically the scum of the earth. Piracy is one thing, but rampant profiteering off of piracy is another. If you can track it down, the list of items siezed from his home is pretty hilarious, apparently he had a full-sized Predator statue.
As for Anonymous, I didn't really have much respect for them before, but roping other people into their DDOS unwittingly is just about as low as it gets. They're putting people in harm's way because they're mad they can't download their movies, and that's not cool. I'd like to believe it's just a BS story for plausible deniability, but I know better. (And it's a pretty flimsy excuse for when the FBI lands on your doorstep in any case.)