- Associated Press - Thursday, January 19, 2012

One of the world’s largest file-sharing sites was shut down Thursday, and its founder and several company executives were charged with violating piracy laws, federal prosecutors said.

An indictment accuses Megaupload.com of costing copyright holders more than $500 million in lost revenue from pirated films and other content. The indictment was unsealed one day after websites including Wikipedia and Craigslist partially shut down in protest of two congressional proposals intended to thwart online piracy.

The news of the shutdown seemed to bring retaliation from hackers who claimed responsibility for attacking the Justice Department’s website. Federal officials confirmed it was down Thursday evening and that the disruption was being “treated as a malicious act.”

A loose affiliation of hackers known as “Anonymous” said it carried out the attack. Also hacked was the site for the Motion Picture Association of America and perhaps others.

Megaupload is based in Hong Kong, but some of the purportedly pirated content was hosted on leased servers in Ashburn, Va., which gave federal authorities jurisdiction, the indictment said.

The Justice Department said in a statement that Kim Dotcom, formerly known as Kim Schmitz, and three other executives were arrested Thursday in New Zealand at the request of U.S. officials. Two other defendants are at large.

The Electronic Frontier Foundation, which defends free speech and digital rights online, said in a statement: “This kind of application of international criminal procedures to Internet policy issues sets a terrifying precedent. If the United States can seize a Dutch citizen in New Zealand over a copyright claim, what is next?”

Megaupload was unique not only because of its massive 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.

Before the site was taken down, the Hong Kong-based company posted a statement saying accusations 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.

Meanwhile, the Justice Department said its Web server for justice.gov was “experiencing a significant increase in activity, resulting in a degradation in service.” A spokesman for the Motion Picture Association of America said in an emailed statement that his group’s site had been hacked, too, although it appeared to be working later in the evening.

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