DI FEDS A GET ON BAD

MegaUpload file sharing site shut down for piracy by Feds
January 19, 2012 | 2:39 pm

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This post has been updated. See note below.

The Department of Justice announced Thursday that it has conducted a major action to shut down MegaUpload, a popular file-sharing site widely used for free downloads of movies and television shows.

After receiving indictments from a grand jury in Virginia for racketeering conspiracy, conspiracy to commit copyright infringement and other charges on Jan. 5, federal authorities on Thursday arrested four people and executed more than 20 search warrants in the U.S. and eight foreign countries, seizing 18 domain names and an estimated $50 million in assets, including servers run in Virginia and Washington, D.C.

MegaUpload is a “digital locker” that allows users to store files that can then be streamed or downloaded by others. Its subsidiary site MegaVideo became very popular for the unauthorized downloads of movies and TV shows. Users whose uploaded content proved particularly popular were paid for their participation.

In a joint statement, the Justice Department and FBI called the action “among the largest criminal copyright cases ever brought by the United States.”

Ira Rothken, an attorney for MegaUpload, said in an interview that he only learned of the actions in a press release this morning and had not yet read the entire indictment. “Our initial impression is that the allegations are without merit and MegaUpload is going to vigorously contest them,” he said. “We have deep concerns over due process and assets being taken without the opportunity for a hearing.”

According to the indictment, the operators of MegaUpload earned more than $175 million in illegal profits and caused an estimated $500 million in harm to copyright holders.

The site is advertised as having more than 50 million daily visitors, according to federal authorities.

Four of MegaUpload’s operators have been arrested in New Zealand, while three more remain at large. Not listed on the indictment is rapper Swiss Beatz — real name Kasseem Dean — who, according to a report in the New York Post, is the CEO of MegaUpload. Beatz is married to pop singer Alicia Keys.

Rothken said that Beatz had not been running the site but that recently there had been “a transition period going on.”

The seven each face a maximum of 55 years in prison.

The news is sure to be welcome in the entertainment industry, whose leaders have faced a recent setback in their push for the Stop Online Piracy Act and Protect Intellectual Property Act. The proposed bills, if passed, would make it easier for U.S. courts to go after piracy sites that, unlike MegaUpload, operate entirely overseas.

Critics who believe the bills are heavy-handed and don’t adequately protect civil liberties conducted a U.S. Internet “blackout.” As many as 10,000 websites went black Wednesday, among them Wikipedia, Craigslist and Reddit. The protest helped to pressure lawmakers to oppose SOPA and PIPA.

The Obama administration announced its opposition to the bills in their current forms Saturday.

[Update, 2:55 p.m.: The websites of the Justice department and Universal Music Group, which had been involved in litigation with MegaUpload, were down on Thurday. The sites were attacked by members of the hacker group Anonymous in response to the actions against MegaUpload, according to a report on CNET News.]