FBI shuts down Megaupload, charges seven people

20 Jan 2012

The FBI has charged seven people with running an “international organised criminal enterprise” through file-sharing site Megaupload and other related sites. Meanwhile, Anonymous attacked US government and music websites to protest these charges.

Those charged include the company’s founder, 37-year-old Kim Schmitz, 38-year-old Finn Batato from Germany, 35-year-old Julius Bencko from Slovakia, 39-year-old Sven Echternach from Germany, 40-year-old Mathias Ortmann from Germany, 32-year-old Andrus Nomm from Estonia and 29-year-old Bram van der Kolk from the Netherlands.

Schmitz, Batato, Ortmann and van der Kolk were arrested, while Bencko, Echternach and Nomm were not found. The arrests were made in New Zealand by New Zealand authorities under provisional arrest warrants from the US. The FBI seized US$50m in assets and law-enforcement authorities executed more than 20 search warrants in the US and eight other countries. The US District Court in Alexandria, Virginia, ordered the seizure of 18 domain names associated with Megaupload.

The US Justice Department claims these individuals are responsible for “massive worldwide online piracy of numerous types of copyrighted works,” generating more than US$175m. It also claims they caused more than half a billion dollars in harm to copyright holders.

Copyright infringement

The people charged were indicted by a jury in the Eastern District of Virginia in the US on 5 January and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two counts of criminal copyright infringement.

The indictment alleged that for five years, Megaupload operated websites which “unlawfully reproduce and distribute infringing copies of copyrighted works, including movies – often before their theatrical release – music, television programmes, electronic books, and business and entertainment software on a massive scale.”

It said the individuals involved used a business model which encouraged users to upload the most popular copyrighted works for downloading. Content which was not regularly downloaded was automatically deleted, which the indictment claims was done to discourage users in using Megaupload for personal storage.

The accused allegedly paid users who they knew uploaded infringing content and publicised links and didn’t include a public search tool to make it difficult for law enforcement authorities to find infringing content. They also didn’t terminate accounts which posted infringing content and “deliberately misrepresented to copyright holders that they had removed infringing content.”

The file-sharing site claims to have had more than 1bn views, more than 150m registered users, 50m daily visitors and accounted for 4pc of the total traffic on the internet.


Hackivist collective Anonymous retaliated against these arrests, saying it has launched its “largest attack ever” and has attempted to take down numerous sites linked to the US government and the music industry.

The sites Anonymous targeted included:

At the time of writing, most of the sites were still up, though Universal Music and RIAA’s websites were down.

The struggle between the music industry’s fight against piracy online was recently thrown into the limelight with the controversy over SOPA and PIPA, which aimed to enact strict anti-piracy laws on the web.

Hundreds of websites, such as Wikipedia, Reddit and Boing Boing, staged a blackout on Wednesday to protest this bill, believing that it would grant wide-ranging powers which could threaten the fabric of the internet, stifle innovation and pull sites offline without due process.