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Feds Shut Down Megaupload Over Piracy Violations

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By Andrew Chow, Esq. on January 19, 2012 6:15 PM

Popular file-sharing website Megaupload has gone dark, but not in protest of SOPA. Feds shut down Megaupload on Thursday, and accused the site of violating Internet piracy laws in a so-called "Mega conspiracy."

Megaupload's alleged piracy cost copyright holders more than half a billion dollars in revenue, while raking in $175 million in illegal profits, the Justice Department claims in its indictment.

It's such a big deal, some Megaupload executives and the website's founder -- who goes by the name Kim Dotcom -- were arrested in New Zealand at the Justice Department's request, the AP reports.

So what allows the federal government to shut down Megaupload, which is technically based in Hong Kong, and arrest its New Zealand-based executives?

The answer seems to be linked to the location of servers leased by Megaupload. The company used servers located in Ashburn, Va., to host some of its pirated material, the Justice Department's indictment claims. That's enough to allow the case to be filed in federal court in the Eastern District of Virginia.

The United States' extradition treaty with New Zealand, in effect since 1970, should allow the feds to fly Dotcom and the other New Zealanders to face justice in a U.S. courtroom.

Other defendants in the "Mega conspiracy" live in Germany, Slovakia, Estonia, and the Netherlands, The New Zealand Herald reports. They could each face up to 50 years in prison if convicted of conspiracy to commit racketeering, copyright infringement, and money laundering.

"Clearly we have due process concerns. This was done without a hearing," a lawyer for Megaupload, which boasted 150 million users, told The New York Times.

A grand jury indicted Megaupload and its executives two weeks ago, but the charges weren't made public until Thursday. The feds' Megaupload shutdown followed a widespread Internet "blackout" to protest the Stop Online Piracy Act that's being considered by Congress.

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