One of the world's most popular file-sharing sites was shuttered 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 to protest two congressional proposals intended to make it easier for authorities to go after websites that contain pirated material, especially those with overseas headquarters and servers.
Megaupload is based in Hong Kong, but some of the suspected pirated content was hosted on leased servers in Ashburn, Va., which gave federal authorities jurisdiction, the indictment said.
The Justice Department said Kim Dotcom, 37, and three other employees were arrested Thursday in New Zealand at the request of U.S. officials. Three other defendants are at large.
Before Megaupload was taken down, it posted a statement saying accusations that it facilitated massive breaches of copyright laws were "grotesquely overblown."
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 Thursday evening.
A spokesman for the Motion Picture Association of America said in an emailed statement that the group's site had been hacked, although it appeared to be working later Thursday.
"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 because of its massive size and the volume of downloaded content and 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 Alicia Keys and Kanye West, among others.
The company listed Swizz Beatz, a musician who married Keys in 2010, as its chief executive officer. He was not named in the indictment and declined to comment.
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 and 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.
For instance, users received cash bonuses if they uploaded content popular enough to generate massive numbers of downloads, according to the indictment. Such content was almost always copyright protected.
The site boasted 150 million registered users and about 50 million hits daily. The Justice Department said it was illegal for anyone to download pirated content, but its investigation focused on the leaders of the company, not end users who may have downloaded a few movies for personal viewing.
A lawyer who represented the company in a lawsuit last year declined to comment Thursday. Efforts to reach an attorney representing Dotcom were unsuccessful.
Dotcom, a resident of Hong Kong and New Zealand, and a dual citizen of Finland and Germany, made more than $42 million from the site in 2010 alone, according to the indictment.
Dotcom legally changed his name. He was previously known as Kim Schmitz and Kim Tim Jim Vestor. He is founder, former CEO and current chief innovation officer of Megaupload.
Officials estimated it could be a year or more before Dotcom and the others arrested in New Zealand are formally extradited.
Several sister sites were also shut down, including one dedicated to sharing pornography files.