McLEAN, Va. — One of the world’s largest file-sharing sites was shut down Thursday, and its founder and several company executives were charged with violating piracy laws, federal prosecutors said.
An indictment accuses Megaupload.com of costing copyright holders more than $500 million in lost revenue from pirated films and other content.
The indictment was unsealed one day after websites including Wikipedia and Craigslist shut down in protest of two congressional proposals intended to thwart online piracy.
The Justice Department said in a statement said that Kim Dotcom, formerly known as Kim Schmitz, and three other executives were arrested Thursday in New Zealand at the request of U.S. officials.
Two other defendants are at large.
Megaupload was unique not only because of its size and the volume of downloaded content, but also because it had high-profile support from celebrities, musicians and other content producers who are most often the victims of copyright infringement and piracy. Before the website was taken down, it contained endorsements from Kim Kardashian, Alicia Keys and Kanye West, among others.
The Hong Kong-based company listed Swizz Beatz, a musician who married Keys in 2010, as its chief executive officer. He was not named in the indictment and declined to comment through a representative.
Before the site was taken down, it posted a statement saying allegations that it facilitated breaches of copyright laws were “grotesquely overblown.”
“The fact is that the vast majority of Mega’s Internet traffic is legitimate, and we are here to stay. If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch,” the statement said.
The site boasted 150 million registered users.
A lawyer who represented the company in a lawsuit last year declined comment Thursday.
Megaupload is considered a “cyberlocker,” in which users can upload and transfer files that are too large to send by e-mail. Such sites can have perfectly legitimate uses. But the Motion Picture Association of America, which has campaigned for a crackdown on piracy, estimated that most of the content being shared on Megaupload was in violation of copyright laws.
The website allowed users to download films, TV shows, games, music and other content for free, but made money by charging subscriptions to people who wanted access to faster download speeds or extra content. The website also sold advertising.
The indictment was returned in the Eastern District of Virginia, which claimed jurisdiction in part because some of the purported pirated materials were hosted on leased servers in Ashburn, Va.
Dotcom, a resident of both Hong Kong and New Zealand, and a dual citizen of Finland and Germany, made more than $42 million from the conspiracy in 2010 alone, according to the indictment.
Dotcom is founder, former CEO and current chief innovation officer of Megaupload.
Meanwhile, Senate Democratic leaders still plan to vote Tuesday on taking up the Protect International Property Act and supporters were scrambling to make changes before then to answer some of the critics, but it was questionable whether they had the 60 votes needed.
Half-a-dozen of the 40 original cosponsors of what is known as the PIPA bill withdrew their support Wednesday amid a one-day protest blackout by Wikipedia and other Web giants and a flood of emails to Capitol Hill offices that at times doubled normal volumes.
Critics of the Senate bill and its counterpart in the House say the legislation would censor the Web and impose burdensome regulations on U.S. businesses.
Senate Majority Leader Harry Reid, D-Nev., has resisted suggestions he put off the Tuesday vote. Reid and the bill’s main sponsor, Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., say it’s too important to delay action on legislation aimed at combating the billions of dollars that American content creators and companies lose to foreign copyright violators and counterfeiters every year.
Senate Republican leader Mitch McConnell of Kentucky on Thursday urged Democrats to shelve the bill for now, saying serious issues with the measure should be resolved before “prematurely” bringing it to the floor.
Information for this article was contributed by Jim Abrams of The Associated Press.
Front Section, Pages 4 on 01/20/2012