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US government shuts down

Accuses owners of criminal copyright infringement.

Move over Wikileaks, because this week's internet site that the US government loves to hate is - or at least it was until the FBI and US Department of Justice shut it down yesterday and arrested most of the people running it.

Megaupload allowed users to upload files of virtually any kind and receive a unique download URL to share with their friends, clients or whoever. The basic free service allowed for files up to 2GB, while the premium service had no such limits. Files were deleted if no one grabbed them for 21 days.

However, the FBI and DOJ claimed Megaupload was used to distribute pirated material - including video games - on a massive scale. The authorities alleged that the site's operators were not only aware of this but encouraged it and only paid lip service to removal notices from copyright holders.

According to their swanky federal calculators, Megaupload brought in $175 million in "illegal profits" through advertising revenue and premium memberships, and the damage done to copyright holders by all this criminality was "well in excess of $500 million".

Before it was shut down Megaupload posted a statement, picked up by the BBC, saying that the allegations were "grotesquely overblown". "The fact is that the vast majority of Mega's internet traffic is legitimate, and we are here to stay," it added, before being switched off.

The news has not gone down well in all corners of the internet, with notorious denial-of-service group Anonymous apparently targeting the FBI and DOJ websites in response. Both were back up at the time of writing.

The FBI and DOJ statement about the arrests - described as "among the largest criminal copyright cases ever brought by the United States" - went into some detail about the allegations of criminal copyright infringement and money laundering listed on the indictment.

"The conspirators allegedly paid users whom they specifically knew uploaded infringing content and publicised their links to users throughout the world," it said.

"As alleged in the indictment, the conspirators failed to terminate accounts of users with known copyright infringement, selectively complied with their obligations to remove copyrighted materials from their servers and deliberately misrepresented to copyright holders that they had removed infringing content.

"For example, when notified by a rights holder that a file contained infringing content, the indictment alleges that the conspirators would disable only a single link to the file, deliberately and deceptively leaving the infringing content in place to make it seamlessly available to millions of users to access through any one of the many duplicate links available for that file."

The FBI and DOJ announced coordinated arrests in nine countries. Co-founders Kim Dotcom (formerly Kim Schmitz) and Mathias Ortmann were both arrested in Auckland, New Zealand while others were rounded up elsewhere. A few of the company's employees remain at large.

The news comes in the same week as widespread protests against SOPA and PIPA laws that could cause massive disruption to the internet under the auspices of preventing copyright infringement and piracy.

US authorities denied that the two things were linked, claiming the Megaupload decision was made weeks ago.