File-Sharing Site Megaupload Shut Down, Executives Arrested

19 January 2012 | 03:53 PM ET | Paul Wagenseil, SecurityNewsDaily Managing Editor

CREDIT: Megaupload.com

The online file-sharing site Megaupload.com has been shut down, and its founder and three other executives arrested on charges of copyright violations and piracy, U.S. authorities announced Thursday.

Kim Schmitz and the three other men were arrested in New Zealand, according to an FBI press release.

"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 FBI said.

The Justice Department said that Megaupload.com and related sites, including Megavideo, Megalive and Megabox, made $175 million illegally and were cost copyright owners $500 million, presumably in hypothetical lost sales.

"For more than five years the conspiracy has operated websites that unlawfully reproduce and distribute infringing copies of copyrighted works, including movies — often before their theatrical release — music, television programs, electronic books, and business and entertainment software on a massive scale," the FBI press release said.

Megaupload servers in Washington, D.C., Virginia, Canada and the Netherlands were shut down, and both the Megaupload domain name and the site's IP address now go nowhere.

Megaupload allowed anyone to upload anything to its servers, often for free. Each file was given its own URL, which would allow anyone else to access it. While a large part of Megaupload's business was legitimate, the site quickly became a repository for illegal copies of movies, TV shows, software and music.

Such offshore file-sharing sites are exactly what the controversial SOPA and PIPA bills in Congress are meant to target. Today's domain seizure and arrests are either proof that rampant piracy exists, or that the existing laws are enough to stamp out such piracy, depending on your point of view.

Schmitz, 37, is a colorful character who has a long history of computer hacking and scams dating back to his teenage years in his native Germany. He also goes by the names Kim Dotcom and Kim Tim Jim Vestor, is a citizen of Germany and Finland and a legal resident of New Zealand and Hong Kong.

According to this video he put on YouTube, Schmitz is also the No. 1 player of the video game "Call of Duty: Modern Warfare 3."

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