Megaupload Site Shutdown by Feds, Anonymous Retaliates

On Wednesday BE Next told you about the legal battle between Universal Music Group and Megaupload, a popular file-sharing site of which Kaseem “Swizz Beatz” Dean is part owner and CEO. [Editor’s Note: Megaupload’s top lawyer has recently denied reports that Swizz Beatz is the company’s CEO, contradicting Swizz Beatz’s listing as CEO on the site’s “About” page.]

Today, according to the Associated Press,  federal prosecutors in Virginia have shut the site down and charged it’s founder, Kim Dotcom (formerly known as Kim Schmitz), and six others with violating piracy laws.

Dotcom and three others connected to Megaupload were arrested in New Zealand at the request of U.S. officials Thursday while the remaining three defendants are still at large. Search warrants were executed in nine countries including the U.S. and officials have seized approximately $50 million in property including luxury cars, servers and the 18 domain names that made up the Mega network.

In the indictment the Hong Kong -based Megaupload is accused of costing copyright holders $500 million in lost revenue from pirated content like movies, TV shows and music. The indictment alleges that Dotcom made $42 million from the site in 2010 alone.

Megaupload is what is known as a “locker” site which allows users to upload, store and transfer files too large for transfer via email. By paying for a subscription to the premium service users had access to larger amounts of files storage space and faster download rates. The revenue for the site wasn’t strictly subscriber-based as it also sold advertisement on the site.

Prior to the site’s shutdown Megaupload released a statement in response to claims of piracy:

“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.”

Last month Swizz Beatz began to emerge as the celebrity face of the site and was listed as the company’s CEO. A series of promotional videos for Megaupload featuring Sean “Diddy” Combs, Kanye West, Mary J. Blige and will.i.am drew the ire of Universal Music Group who asked that the video for “The Mega Song” be taken down because the testimonials from artists connected to the huge music company were  not cleared with the company, Megaupload responded with a lawsuit against Universal for blocking the distribution of the video. Swizz Beatz has not been charged in the recent idictments and it is still unclear what the news will mean for him and his stake in the company.

BE Next reached out to Swizz Beatz who, through his publicist, declined to comment at this time.

On Thursday, shortly after news of Megaupload’s shutdown began trending on Twitter, “hacktivist” group Anonymous responded by attacking and temporarily bringing down the Web sites of the Recording Industry Association of America (RIAA), the Motion Picture Association of America (MPAA), Universal Music Group and the U.S. Department of Justice.  The hack attack was retaliation for the shutdown of Megaupload which they attribute to the content industry’s lobby and U.S. law enforcement. At press time the aforementioned sites had been restored.