FBI Shuts Down Megaupload File-Sharing Site With Online Piracy Indictments

Megaupload, one of the largest file-sharing services on the Internet, has been shut down by federal prosecutors on charges that it systematically abetted widespread piracy of copyrighted music, movies, video and other intellectual property.

Just a day after a 24-hour blackout of popular Websites such as Wikipedia,Reddit and BoingBoing, which were protesting a pair of controversial anti-piracy bills making their way through Congress, federal law enforcement stepped in and shut down one of the world's largest file-sharing sites.

The 72-page indictment, unsealed Jan. 19, accuses seven individuals and two corporations, Megaupload Limited and Vestor Limited, of costing copyright holders more than $500 million in lost revenue from pirated movies and other content. The individuals face a maximum penalty of 20 years in prison on racketeering charges, five years for conspiracy to commit copyright infringement, 20 years on money laundering charges and five years on related charges.

The activist hacker collective Anonymous and allies were swift to launch distributed denial-of-service attacks in retaliation for the indictments and the takedown of the Megaupload site, blacking out a number of U.S. government and industry Websites. The sites-including the FBI, U.S. Department of Justice, U.S. Copyright Office and several entertainment giants, including Universal Music, Recording Industry Association of America and Motion Picture Association of America-were knocked offline Jan. 19 and remained unavailable for the remainder of the day and evening.

An online "locker" service, Megaupload allowed users to anonymously transfer large files by uploading them to the company servers and share the content via a unique URL. The indictment claims movies, television programs, music, ebooks and software were distributed through Megaupload's network of sites. The company allegedly made $175 million through ads that appeared on the site as well as by selling premium subscriptions to users, according to the Megaupload indictment, a copy of which is now available on Scribd.com.

"This action is among the largest criminal copyright cases ever brought by the United States," the Justice Department said in a statement about the indictment.

Authorities executed more than 20 search warrants in the United States and in eight other countries to shut down the site. Law enforcement has seized a number of servers and 18 domain names, including megaupload.com, used by Megaupload to operate the file-sharing services. The servers were located in the United States, Canada and the Netherlands.

Four of the seven people, including the site's founder, Kim Dotcom, formerly Kim Schmitz, have been arrested in New Zealand, the authorities said. The indictment claims Megaupload was the 13th most popular Website in the world. Kim Dotcom allegedly made more than $42 million in 2010 alone, according to court papers.

Federal prosecutors called the group "an international organized criminal enterprise allegedly responsible for massive worldwide online piracy."