One of the world’s most popular file-sharing sites was shut down Thursday, and its founder and several company officials were accused of facilitating millions of illegal downloads of films, music and other content.
A federal indictment accused Megaupload.com of costing copyright holders at least $500 million in lost revenue. The indictment was unsealed one day after websites including Wikipedia and Craigslist shut down in protest of two congressional proposals intended to make it easier for authorities to go after sites with pirated material, especially those with overseas headquarters and servers.
Megaupload is based in Hong Kong, but some of the alleged pirated content was hosted in the US on leased servers in Ashburn, Virginia, which gave federal authorities jurisdiction, the indictment said.
The Justice Department said in a statement that Kim Dotcom, 37, and three other employees were arrested in New Zealand on Thursday at the request of US officials.
The four, two of whom are New Zealand residents, are among seven people facing online piracy charges in the US.
Fifteen people, including children, were present when police raided the Auckland property of Megaupload's 37-year-old founder, Kim Dotcom (also known as Kim Schmitz), a German national and New Zealand resident, about 6.45am (0445 AEDT).
Schmitz and two other men were arrested at the property.
Two shotguns were also recovered.
The other three arrested were Megaupload chief marketing officer Finn Batato, chief technical officer and co-founder Mathias Ortmann and Bram van der Kolk. Batato and Ortmann are German, while van der Kolk is a Dutch national who holds New Zealand residency.
Police executed 10 search warrants at houses and businesses across Auckland, seizing more than $NZ10 million ($A7.77 million) from financial institutions, and assets, including luxury cars worth $NZ6 million ($A4.66 million) and expensive art works.
In a press conference on Friday, Detective Inspector Grant Wormald said it was 'likely' the men had also breached New Zealand copyright laws, although police had no intention of laying charges in the country.
The men face copyright infringement charges in the US which carry sentences of up to 20 years.
The four men were due to appear on Friday afternoon in North Shore District Court, where an application for them to be extradited to the US will be heard.
The other three sought in relation to the Megaupload piracy charges were still at large and not thought to be in New Zealand.
More than 20 search warrants were executed in the US and eight other countries on Friday.
Officials seized about $NZ50 million ($A38.83 million) in assets, as well as 18 domain names associated with Megaupload.
Two corporations, Megaupload Limited and Vestor Limited, are included in the FBI's indictment.
Before Megaupload was taken down, it posted a statement saying allegations that it facilitated massive 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 indictment may have prompted a response from the loose affiliation of hackers known as Anonymous, which claimed credit for attacking the Justice Department's website.
The site was inaccessible on Thursday evening.
'The Department of Justice web server hosting justice.gov is currently experiencing a significant increase in activity, resulting in a degradation in service,' the agency said in a statement.
'The department is working to ensure the website is available while we investigate the origins of this activity, which is being treated as a malicious act until we can fully identify the root cause of the disruption.'
A spokesman for the Motion Picture Association of America said in an emailed statement on Thursday that the group's site had been hacked, but it appeared to be working later on Thursday evening.
'The motion picture and television industry has always been a strong supporter of free speech,' the spokesman said.
'We strongly condemn any attempts to silence any groups or individuals.'
Megaupload was unique not only because of its enormous 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 company listed Swizz Beatz, a musician who married Keys in 2010, as its CEO.
He was not named in the indictment and declined to comment through a representative.
According to the indictment, Megaupload was estimated at one point to be the 13th most frequently visited website on the internet.
Current estimates by companies that monitor web traffic place it in the top 100.
The five-count indictment, which alleges copyright infringement as well as conspiracy to commit money-laundering and racketeering, described a site designed specifically to reward users who uploaded pirated content for sharing, and turned a blind eye to requests from copyright holders to remove copyright-protected files.