The founder of file-sharing website Megaupload — which was shut down (alongside its sister site Megavideo) by the FBI last week, as well as three associates — was ordered to be held in custody by a New Zealand court on Monday.
Reuters reports that the 38-year-old — who goes by the names Kim Dotcom, Kim Schmitz, and Kim Tim Jim Vestor — has denied the charges of Internet piracy and money laundering. Dotcom — as well as the three others, Bram van der Kolk, Finn Batato, and Mathias Ortmann — will be held until Wednesday, when Judge David McNaughton is expected to issue a written decision. (Seven individuals in total, excluding reported CEO Swizz Beatz, who have been referred to the FBI has “The Mega Conspiracy,” have been officially charged with online copyright infringement.) According to the National Business Review, two of the remaining men sought by the FBI in conjunction with the case, Sven Echternach and Andrus Nomm, have also been arrested.
Prosecutor Anne Toohey argued at the bail hearing that Dotcom, who was reportedly living a life of excess and was taken out of a safe room by police after he had barricaded himself in during his arrest, was a flight risk “at the extreme end of the scale.” Tooehy said that three passports, as well 45 credit cards, were found in Dotcom’s mansion. His defense lawyer defense lawyer Paul Davison maintained that “My client collects them (credit cards), most of them are out of date.”
While Davison said that Dotcom is “realistic about what is happening,” the defense lawyer stated in court that his client’s site Megaupload was being misrepresented. “His business did not reproduce or copy material as alleged,” he told the court, adding that the site, which he argued simply offered online storage and was not unlike YouTube in that users simply “promoted their creativity.” The FBI estimated in a statement released last week that the “harm caused by the conspiracy’s criminal conduct to copyright holders is well in excess of $500 million. The conspirators allegedly earned more than $175 million in illegal profits through advertising revenue and selling premium memberships.” However, the prosecutor stated, “The FBI believes the sums located are unlikely to represent all the overseas bank accounts owned by Mr. Dotcom.”
The shutdown of Megaupload, which came in the shadow of the SOPA and PIPA outrage over censorship, caused an uproar and retaliation on the Internet. Just moments after the site was taken down, hacking group Anonymous attacked the websites of the Recording Industry Association of America, the Motion Picture Association of America, BMI.com, and Universal Music, which have all since been restored. But even with the resistance and protest by many on the Internet regarding Megaupload, the shock waves can already be felt by the FBI’s crack down. Online data storage site FileSonic has stopped its file-sharing service entirely, alerting users that “Our service can only be used to upload and retrieve files that you have uploaded personally.”