Federal Agents Seize Media Sharing Hub, Hackers Retaliate

Federal agents have charged seven individuals and two corporations affiliated with media sharing hub megaupload.com on numerous conspiracy counts including racketeering, copyright infringement, and money laundering. According to a release by the FBI, the action is among the largest criminal cases brought by the United States. As of yesterday (Jan. 19), Megaupload.com has been shut down.

The indictment alleges the individuals and the two corporations — Megaupload Limited and Vestor Limited — are responsible for more than $500 million in harm to copyright owners from more than five years of distributing movies, music, television programs, e-books, and software. The site is said to have generated more than $175 million in proceeds from premium memberships.

As a response to the shutdown, a collection of Megaupload supporters from the “Hacktivist” collective Anonymous tweeted “One thing is certain: EXPECT US! #Megaupload” from @anonops as websites for organizations started to crash, including the Department of Justice, the US Copyright Office, Universal Music, the RIAA, BMI, WMG and the MPAA. Anonymous is said to have caused the crashes by flooding the websites with traffic to overwhelm servers, rather than any kind of security breach. CNN reported today (1/20) that most sites are back up and running.

Nevertheless, RIAA Chairman and CEO Cary Sherman responded to the federal action by saying, “We are deeply grateful to the Justice Department professionals who worked tirelessly on this case for two years. Federal law enforcement has delivered a historic blow against one of the most notorious illegal distribution hubs in the world…that posed a very real and serious problem for the creative community. The indictment should send a clear signal to other similar illegal distribution hubs that think they can violate the law with impunity.”

The Virginia issue charges employees of New Zealand, Germany, Slovakia and the Netherlands. No U.S. citizens were named, however the site has servers in Ashburn, VA., and Washington D.C., which prompted the investigation.

“The government has many tools at its disposal, including criminal prosecution,” said Sherman. “But if this service were hosted and operated, for example, in a foreign country, our government would be essentially powerless to do anything about it. That needs to change.”

The individuals each face a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering with reward programs for users and affiliates, and five years in prison on each of the substantive charges of copyright infringement.

Megaupload.com, is advertised at one point to be the 13th most frequently visited website on the Internet accounting for four percent of the total traffic on the Internet, having more than 150 million registered users and 50 million daily visitors.

This case is part of efforts by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property.