January 23, 2012:Megaupload assets frozen as rival cyberlockers react to shutdown and arrests

The shutdown of online storage service Megaupload last week – along with the arrest of founder Kim Dotcom and other executives – has seen reverberations throughout the weekend. Here’s an update on the latest rumblings around the company, its rivals and the industries that helped take it down.

Hong Kong Customs has frozen more than $39m of the cyberlocker firm’s assets according to the Wall Street Journal. The FBI has begun extradition proceedings to take him from New Zealand to the US for trial for charges including racketeering, money laundering and online piracy.

Dotcom’s lawyer, Ira Rothken, says Megaupload is fighting to get its assets – and its servers – back. “The company is looking at its legal options for getting back its servers and its domain and getting its servers back up online,” he tells Reuters, while telling CNET that “Many of the allegations made are similar to those in the copyright case filed against YouTube and that was a civil case….and YouTube won.”

Belatedly, Megaupload has dropped its lawsuit against Universal Music Group over the recent YouTube takedown of its Mega Song video. Meanwhile, music industry figures have been telling Reuters about the threat they see from cyberlockers.

“Generally the fastest growing form of Internet piracy,” says the RIAA’s Jonatham Lamy, while former EMI anti-piracy exec Victoria Bassetti says “Anecdotally, when we have pre-release leaks, the first week there is a massive amount of consumer trade that goes directly to Megaupload’s door.”

With Megaupload offline for now, are rival online storage services worried? Filesonic has disabled all file-sharing features – its users can now only access their own uploaded files, not those of others. Meanwhile, Uploaded.to has blocked its service to all US users.

RapidShare, though, is keeping a stiff upper lip about the situation. “We’re not concerned or scared about the raid,” spokesperson Daniel Raimer tells Ars Technica. “File hosting itself is a legitimate business.” Meanwhile, CEO Alexandra Zwingli protests that the company is “an absolutely legal service – like Swisscom or YouTube”.

MediaFire is also protesting its innocence. “We don’t have a business built on copyright infringement,” CEO Derek Labian tells VentureBeat. “Like many other cloud-based sharing services like Box.net and Dropbox, we’re a legitimate business targeting professionals.”

Meanwhile, police in New Zealand have provided some startling details about the arrest of Megaupload boss Kim Dotcom last week.

It involves helicopter-backed cops storming his mansion, breaking “a number of electronic-locking mechanisms” and finally cutting their way into his safe room, to find him “near” a shotgun. “It was definitely not as simple as knocking at the front door,” one of the detectives tells Reuters.

Fast Company also has some good detail on Dotcom’s lifestyle: from offering a $10m bounty for Osama bin Laden and consorting with Playboy bunnies through to trying to charter a nuclear ice-breaker ship to cruise the North Pole.

It has also emerged that Dotcom had been a busy man in recent months, playing the Call of Duty: Modern Warfare 3 console game enough to be ranked as the world’s top player. No, really. “I’m also pretty good at Mario Kart,” he tweeted to VentureBeat after the story emerged.

And finally, for some more light relief, check out Taiwanese animators NMA’s take on Dotcom’s arrest:


Stuart Dredge
READ MORE: Analysis News
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