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One of the the world's biggest content distribution sites -- and oft a piracy tool -- is no longer with us

The U.S. government, still digesting the massive public outcry against the "Stop Online Piracy Act" (SOPA) (H.R. 3261) and "PROTECT IP Act" (PIPA) (S.968), executed what it calls a major anti-piracy operation Thursday afternoon, working with American ISPs to block access to top content upload site, which the government alleges is a source of persistent copyright infringement.

I. RIP Megaupload

Four of the site's seven core admins were arrested by police in New Zealand, in cooperation with their American peers.  According to the most recent report all seven admins have since been taken into custody.

Megaupload was rated the internet's 72nd most used website, and at its peak was the 13th most popular onine property in the world.

The site was founded in Hong Kong by wealthy entrepeneur Kim Schmitz (aka "Kim Dotcom), a German expatriate with a flare for controversy (and in his earlier days insider trading and hacking).  Kim Dotcom reportedly was living in a NZ$30M ($24.08M USD) outside of Auckland, New Zealand, living a cozy existence under the psedunonym "Kim Tim Jim Vestor" and sporting a fake Finnish passport.

Part of the so-called "Megaworld" franchise, Megaupload offered 200 GB of storage space to users for free.  This allowed users to share content with each other.  The only downside from a convenience perspective was that sharing worked through a queue system.  Buying a paid account removed the queueing system and its annoyances, allowing you to upload and pass direct links to your friends.

MegaUpload is no more. [Images Source: MegaUpload via Venture Beat]

The site's easy to use model earned it "more than 150 million registered users, 50 million daily visitors and accounting for four percent of the total traffic on the Internet" according to the U.S. Department of Justice's (DOJ's) complaint filed against the site and its administrators

II. Feds Kill MegaUpload Abruptly, Arrest It's New Zealand Admins

The DOJ accuses Megaupload of acting as the internet's mixtape site and engaging in massive scale copyright violation.  While Megaworld's user policy states that it does not condone infringement and complies with Digital Millenium Copyright Act (DMCA) takedowns from the U.S. federal government for users found to be infringing content, the DOJ argues that the site was support criminality.

It points to $175M USD in property -- including 15 Mercedes, a Maserati, a Lamborghini, a Rolls-Royce with the license plate "GOD" -- that it seized during its raids on the suspects' property.  The DOJ claims that Megaupload masterminded the theft of over $500M USD in copyright work.

The inviduals arrested during the raid, according to the indictment, are:
• Finn Batato, 38, a citizen and resident of Germany, MegaWorld's chief marketing officer;
• Julius Bencko, 35, a Slovakian national who is the graphic designer;
• Sven Echternach, 39, a citizen and resident of Germany, who is the head of business development;
• Mathias Ortmann, 40, the company's chief technical officer, co-founder and director; who previously split his time between Hong Kong and Germany, his native home.
• Andrus Nomm, 32, a megaworld Estonian software programmer and head of the development software division;
• Bram van der Kolk, aka Bramos, 29, a Netherlands native who assisted in programming and network engineers consultant for Mega conspiracy websites.

Again, the site was for profit and insists that it had gone legit and was not supporting piracy.

UMG was particuarly peeved when several of its artists including Kanye West, Will.I.Am, Jamie Foxx, Sean "Diddy" Combs, Alicia Keys, Chris Brown -- performed a video plugging the site -- titled "The MegaUpload Song":  

The UMG briefly suceeded in convincing sites like Google Inc.'s (GOOG) YouTube into false takedowns, but when Megaupload produced documents indicating that the artists all legally agreed to make the song, the track was restated to UMG chagrin.

The DOJ's press release can be found here.  The full complaint can be found here [PDF].  

The DOJ appears to have sided with the irrate UMG in punishing MegaUpload.  It justifies the seizure of $50M USD worth of server electronics in Ashburn, Virg.; Washington, D.C.; the Netherlands; and Canada, by claiming Megaupload's linking system inherently encouraged piracy.  It also accuses Megaupload of failing to process takedown requests on users found to be pirating.

III. Counterstrike

In response to the takedowns and arrests, worldwide internet "hacktivist" collective Anonymous blasted the DOJ, Universal Music Group (a property of Vivendi SpA (EPA:VIV)), and the Recording Industry Association of America, and the Motion Picture Association of America's websites with distributed denial of service attacks, taking them down, temporarily.  

As of 10:00 p.m. EST, these attacks had almost completely subsided allowing normal access to the targeted sites.  Megaupload, on the other hand, remains quite dead.

Some members of the group-without-a-leader posted a message on the Twitter account @YourAnonNews, stating, "The government takes down #Megaupload? 15 minutes later #Anonymous takes down government & record label sites. #ExpectUs."

One of @YourAnonNews' posts even claimed to have downed the U.S. Federal Bureau of Investigations page.  This claim was unable to be verified.  If it did go down, it only went down briefly, as it was fully functional for most of the evening.

A member of Anonymous writes on the Twitter account, "The Internet is here. Are you ready for The Year of Cyber War? We are. Rise up and join us to fight for your rights."

To be clear, Anonymous's retailiatory DDoS attacks have nothing directly to do with the SOPA/PIPA protests, though numerous members of the group did also support those efforts.

Developing story...

Sources: Twitter, U.S. DOJ

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I wonder..
By tamalero on 1/19/2012 10:13:37 PM , Rating: 3
What kind of muscle or pressure the USA government put in New Zealand and the countries raiding and detaining people for "copyright infringement" by US sources.

I wonder if this is a counter to the whole music argument (regarding that famous musical video.. where megaupload claimed the artist were legit doing the video.. but the RIAA claimed it was copyrighted work...)

RE: I wonder..
By CityZen on 1/20/2012 12:30:24 AM , Rating: 5
EXACTLY! That is the most frightening thing of all. I mean, the NEW ZEALAND police arrested four people for a non violent crime supposedly committed against an American Company??? Say what?
I'm neither a lawyer nor an expert in international law, but I have some SERIOUS doubts about the legality of these arrests.

RE: I wonder..
By B3an on 1/20/2012 9:38:41 AM , Rating: 1
America always bullys these type of countries in to things. It's the same with similar draft laws in Europe that are a lot like SOPA. It's been proven the American goverment was behind them and was bullying others to support it. **** America.

RE: I wonder..
By msheredy on 1/20/2012 11:36:17 AM , Rating: 1
No it's not **** America, it's **** the GOV of America. Get it right and don't generalize dipshit.

RE: I wonder..
By gladiatorua on 1/21/2012 2:54:11 PM , Rating: 2
It's always funny how people try to disassociate with their governments when said governments make bad choices.
It doesn't work this way. You might've had a loophole if you lived in North Korea, but your country is a democracy. Your government represents the will of the people. Your people(and you personally) are responsible for the actions of your government.

RE: I wonder..
By Integral9 on 1/24/2012 4:47:58 PM , Rating: 3
Not exactly. The USA is a democratic Republic. Meaning, the citizens elect representatives to do what they generally feel is their will. However, most of these politicians are more concerned with getting re-elected than doing the will of the people. So they do what the corporations and rich people want (the people who pay for their election campaigns), not what the people who put them in office want.

Now add in the fact that in most elections in the USA, the citizens are faced with a choice between a douche bag or a turd sandwich. Which would you rather have? And that's how you get the USA Government. Mostly just a bunch of corporate puppets running amok trying to get re-elected. Which usually means doing what the corporations want and lip-servicing the voters.

imo, Politics is intended to be a civil service, not a career. Term limits enforce this intention. We need term limits in Congress and the Senate.

RE: I wonder..
By StevoLincolnite on 1/20/2012 12:55:33 PM , Rating: 2
America always bullys these type of countries in to things.

Except... America Bullying New Zealand doesn't work, they have tried in the past.

New Zealand is a Nuclear Free zone, America wanted to have it repealed to allow Nuclear ships and weapons, that's not going to happen as the people and Government had already spoken.
So, the US suspends the ANZUS defense obligations to apply some pressure. And even today New Zealand hasn't buckled, they would rather continue their close ties to their neighbor Australia than the US.

New Zealand is seen to have the least corrupt government on Earth, they would have followed and done everything by the book, otherwise they would get castrated by the people and the news outlets.

RE: I wonder..
By x10Unit1 on 1/20/2012 10:56:09 AM , Rating: 2
And you wonder why they want SOPA passed. They already can arrest people in other countries for charges of copyright infringement. It is too slow and too expensive to bribe people do arrest all of these people. Why spend money on time, research, and bribes when you can spend a lot of money for a law that gives you rights to shut down any site you please for little or no reason? I am sure they can use this to arrest people too.

RE: I wonder..
By aurareturn on 1/22/2012 1:40:05 AM , Rating: 2
If you read the entire document, you'll see hard evidence that suggests employees at Megaupload knowingly allowed illegal content on their sites. They were also trying to find traffic to those illegal content. DOJ has emails sent between MU employees talking about how to make money off of these links.

Let's be honest here, illegal content is probably MU's biggest revenue stream. Heck, I thought about buying a MU account once because of that but never did.

If MU was really serious about piracy, they would have went to and deleted all their links. It would have probably taken several people 24 hours to do so and they would have had a big part of illegal content off their service. They didn't and didn't care.

This is MU's fault. I'm sad that they are gone too but let's not act like they are innocent.

RE: I wonder..
By TSS on 1/20/2012 10:58:08 AM , Rating: 4
Frightening is not the word i'd choose. "Normal" would be.

My country (holland) has a agreement with the US that we turn over any dutch citizens suspected of any crime in the US. Probably, that agreement was used in the arrest of the person from the netherlands.

However, if an US citizen is suspected of crime in the netherlands, the US DOES NOT have to turn him/her over. By law, they are allowed to give us the finger.

All perfectly legal, and i suspect remnants of WWII/the cold war. They will remain that way until the politicians grow some balls and recognise the US could just as easily be a threat as a friend, and any relationship should be a 2 way street.

RE: I wonder..
By tecknurd on 1/20/2012 8:39:16 PM , Rating: 1
What kind of muscle or pressure the USA government put in New Zealand and the countries raiding and detaining people for "copyright infringement" by US sources.

Easy, the intellectual property is copyrighted under USA law. It is enforced where copyright content is sold. This means USA has a right to arrest those that did not confine to the rules in those areas. Though USA should of put MegaUpload in a temporarily down state until all copyright material is erase to a point that it did not ever exist, but people that New Zealand police arrested were pro-piracy which is again illegal.

For MegaUploads accounts that are using it legally, those people should start suing if the site is not up. Hacking to bring a government site down does not work against the government. Suing or protesting does.

By ShaolinSoccer on 1/19/2012 10:09:32 PM , Rating: 3
You make it sound like those police shot them to death lol

RE: executed?
By corduroygt on 1/19/2012 10:13:18 PM , Rating: 2
That used to be the punishment for piracy a couple hundred years ago!

RE: executed?
By geddarkstorm on 1/20/12, Rating: -1
RE: executed?
By Rookierookie on 1/20/2012 1:54:15 AM , Rating: 3
And you also used to get burned at the stake for being accused of witchcraft or heresy. Your point?

Warning: Sarcasm detector not found. Please download sarcasm detector from Megaupload.

RE: executed?
By DoctorBeer on 1/20/2012 8:16:10 AM , Rating: 5
404 file not found. :(

RE: executed?
By geddarkstorm on 1/20/2012 2:30:43 PM , Rating: 3
I am sorry your sarcasm detector got deleted :(. Please contact the RIAA for a new and copyrighted edition.

RE: executed?
By jive on 1/25/2012 6:37:26 AM , Rating: 2
technically speaking the sentence from piracy was always death by hanging.

Stupidity or Brilliant Sabotage
By rbuszka on 1/19/12, Rating: 0
RE: Stupidity or Brilliant Sabotage
By rbuszka on 1/19/2012 10:49:40 PM , Rating: 2

"...the supporters of SOPA in Congress to curry a sort of emotional sympathy for the entertainment industry..."

"Otherwise, Anonymous (as a coordinated group) is seriously lacking in shrewdness."

Tell me again why we can't have an edit button?

By Just Tom on 1/20/2012 6:23:35 AM , Rating: 3
There is a preview function, how hard is it to proofread? The problem with editing posts in online forums is it allows someone to post some snarky, nasty comment and then edit it to something innocuous. When people reply to the original posting with their own snark it looks like they are idiots for being so nasty to the OP, who afterall posted a reasonable (after edit) comment.

RE: Stupidity or Brilliant Sabotage
By rbuszka on 1/20/12, Rating: 0
RE: Stupidity or Brilliant Sabotage
By MrBlastman on 1/20/2012 12:52:54 PM , Rating: 2
No, you were not rated down by a douche. You were rated down because you were somehow insinuating indirectly that Anonymous is run by an agency of the United States Government.

To me, that is borderline delusional. It makes for great fiction but beyond that, I doubt there is any serious reality to it.

Otherwise, cough up some supporting facts.

RE: Stupidity or Brilliant Sabotage
By iceonfire1 on 1/20/2012 2:03:52 PM , Rating: 2
Ha, that would make their "hacks" a lot less remarkable, huh. But I actually think that Anonymous & SOPA/PIPA are totally different issues. Anonymous is already utterly illegal, what would a new bill against them do? Take away soap in prison?

RE: Stupidity or Brilliant Sabotage
By rbuszka on 1/20/2012 7:57:19 PM , Rating: 2
My point is that there's a real danger that SOPA supporters will trot out a fallacious 'guilt by association' argument to assassinate the character of those opposed to SOPA by equating them with Anonymous and what are viewed by the general public to be their "shenanigans". It's super-easy to do when governments can play on the mainstream media like a huge keyboard, and so many members of the uninformed public just eat straight out of the hand of the media and don't even think of the fallacy being committed.

The Congress and Senate clearly want this, because they're paid handsomely to represent Big Media (hence it's technically their "job" to do so, not even considering the megalomania streak of some legislators), and I'm sure they see the U.S. Internet public as just getting in the way now. We've probably left more than a few congressmen and senators wondering whether they'll get their full payday from Big Media after the big protest and the eventual 'shelving' of SOPA. The only thing standing between the SOPA bill and a SOPA law is us -- the people. And SOPA isn't going to go away. It's going to keep coming at us, with more money, more bought legislators, and more pressure, and more measures taken to keep it out of the public eye. It would be only too easy to attach the provisions of SOPA to a must-pass, "We can't wait!" defense spending or debt ceiling (endless borrowing) bill and have it pass under the radar of the public until it's too late. After all, we now have the NDAA that permits indefinite detention of U.S. citizens on a whim, and there was no public outcry over that (except from a few informed and freedom-loving sources).

Our only hope is to somehow have a say over who the supreme court justices are, and to elect senators that will properly vet and not confirm activist or corrupt nominees, so that these provisions can be tested for Constitutionality.

RE: Stupidity or Brilliant Sabotage
By ekv on 1/20/2012 8:39:37 PM , Rating: 2
To me, that is borderline delusional. It makes for great fiction but beyond that, I doubt there is any serious reality to it.
I agree. [And it would make a b*tchin' (fiction) book.]

Bulletin board
By Rasputin814 on 1/20/2012 1:54:13 AM , Rating: 2
So what exactly did megaupload do wrong? I get that it's a site that's loaded with pirated software/videos, but what did they do wrong? Is it not in their terms and agreement for users not to upload things that infringe on copyright laws? It's like the bulletin analogy all over again. Do you go after the person who put up an illegal child pornographic image on a bulletin board? Or do you go after the person who own the Bulletin Board.

RE: Bulletin board
By Solandri on 1/20/2012 2:16:35 PM , Rating: 2
My take on it (I have no insider information, this is just speculation) is that due to many of the files uploaded to Megaupload being password protected, only the users know the contents of the files. It's not like YouTube where the MPAA can browse all the videos looking for infringing videos.

From past stories, Megaupload did take down copyright-infringing files when requested. It's just that because it's a file sharing service rather than a video/music sharing service, users are free to encrypt the files thus preventing copyright holders or Megaupload from knowing what's in them.

If I'm right, and the courts uphold this, then in practical terms this is a very, very scary precedent. It means generic file storage services which allow sharing (e.g. Dropbox, Amazon S3) are pretty much illegal. That if the storage service and copyright holders cannot view the contents of encrypted files, then they're presumed to be infringing. Basically, copyright enforcement > privacy.

RE: Bulletin board
By sorry dog on 1/26/2012 1:21:46 PM , Rating: 2
....or basically any cloud storage deals which are all the rage right now.

This deal is heading a train wreck when the legitimate use train hits the remote file storage bridge the govt just blew up.

Not exactly a mature response
By masamasa on 1/20/2012 11:05:28 AM , Rating: 2
These hacker groups never accomplish much of anything, other than to inconvenience others. Why do they even bother?

By iceonfire1 on 1/20/2012 1:58:36 PM , Rating: 2
So what mature, public response are you making? At least they'll have tried to stop it when the govt starts lighting its remaining sheeple on fire.

By Phanbot on 1/20/2012 3:22:12 AM , Rating: 2
Isn't there a "Safe Harbor" law that shields the web site owner from being prosecuted for any illegal actions carried out by it's users?

By Visual on 1/20/2012 5:30:14 AM , Rating: 2
"the site was support criminality" - supporting?
"was in the accused suspects' accumulated in thier possession" - remove "in their"?
"Megaworld post a video of several arists including X, Y, Z for performing a video" - "posted" and remove the "for performing a video"?
"these attacks had almost complete subsided" - completely?
"U.S. Federal Bureau of Investigations" - link is not including the initial "U" for some reason.
"numbers members of the group" - numerous?

By FlipiderDotCom on 1/20/2012 2:15:46 PM , Rating: 2
Corruption starts at the highest level and justified in it's lowest. With Microsoft having the ability of pre-installed software in every PC in the world, with likes of MSN. Innovators such as this wrongly breakout of this uneven playing field on the PC doing so because they believe first off that it's being wrongly done to them.

passport might not be fake
By jive on 1/25/2012 6:12:52 AM , Rating: 2
Regarding the paragraph stating he had a fake Finnish passport, well he is a Finnish citizen so most probably Kim Schmitz does have a genuine Finnish passport. His mother is a Finn and living here as does his sisters.

By Source9 on 1/19/2012 10:21:26 PM , Rating: 1
"One of the the world's biggest content distribution sites -- and oft a piracy tool -- is longer with us"

NO longer with us.

More will follow
By Beenthere on 1/20/12, Rating: -1
RE: More will follow
By CityZen on 1/20/2012 12:22:00 AM , Rating: 2
There will be SOME more take-downs. While authorities will never EVER stop piracy or facilitation of piracy, they will make A FEW OF those who violate law pay for their choices.

There, fixed it for you

RE: More will follow
By geddarkstorm on 1/20/2012 1:16:27 AM , Rating: 3
What about Mediafire, Dropbox, Google, and all the other sites that allow you to upload something and share a link? Is the government going to take down the entire internet Cloud, the very thing so many companies and cell phone systems are pushing for? Because, all of it can be used for facilitation of piracy.

RE: More will follow
By seamonkey79 on 1/20/2012 7:11:36 AM , Rating: 3
I wouldn't be surprised if that was the goal of the product companies, because that way we would be forced back into the only method of business they know, limiting musical choice and making it really expensive for you to get it. They will never have those days back, but I'm sure they think if they get rid of the internet, they will.

RE: More will follow
By Shadowmaster625 on 1/20/2012 9:57:26 AM , Rating: 2
Yes, they will try to take them all down. When they are done what is left will just be google, facebook, amazon, etc. Welcome to Internet 2.0

RE: More will follow
By Reclaimer77 on 1/20/2012 9:33:05 AM , Rating: 1
Is anyone else afraid that these guys are going to push Governments so far, that we'll end up having way LESS rights from the resulting legal backlash that will surely follow? That these hacks will be cited as reasons for needing more "sweeping and comprehensive" legislation on the Internet to fight these "terrorists" etc etc?

I know I am...

RE: More will follow
By tecknurd on 1/21/2012 6:24:49 PM , Rating: 2
I am afraid of the hackers that do criminal acts. The Open Act includes Internet police, but the hackers are unfortunately be one step ahead of the Internet police. Piracy actually already costs me money and costs me problems to watch movies. For some applications, I am afraid of installing them because reputable companies puts in spyware in their applications, so one program copy can only be used at time on a network. It was not like this 15 years ago. It is not unfair for companies to treat me as a criminal because buying my copy of a movie and buying applications. This is happening because of people being inconsiderate and disrespectful by pirating.

"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki

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