Megaupload founder pleads innocent, bail decision delayed

Rival services begin dropping filesharing as case progresses

Megaupload founder Kim Dotcom has pleaded innocent to charges of piracy and money laundering in the New Zealand court trying him for extradition to the US, saying that authorities are trying to make an example of him.

A decision on whether to grant Mr Dotcom bail has been delayed by the judge until Wednesday at the latest after the prosecution called the defendant a "flight risk at the extreme end of the scale", reports Reuters.

Anne Toohey, speaking for the prosecution, said that Mr Dotcom's possession of several passports and credit cards under various pseudonyms, as well as widely distributed financial investments, means that he would be likely to attempt to flee the charges if released on bail.

"The FBI believes the sums located are unlikely to represent all the overseas bank accounts owned by Mr Dotcom," added Toohey.

Dotcom's defence lawyers countered that their client had surrendered all of his passport documentation, and that his 6'6" frame made him unlikely to pass incognito through ports or airports.

The judge has delayed the decision on bail until Wednesday at the latest, saying the decision was too complex to make immediately.

"Given the breadth of issues covered in this bail application and the seriousness of the issues, I am going to reserve my decision," said Judge David McNaughton.

Toohey added that two more members of the company had also been arrested in Europe and faced the some charges as the other executives.

The FBI's prosecution and attempted extradition of Mr Dotcom and several other Megaupload executives has caught the attention of some of the entrepreneur's rivals, too.

FileSonic, which had previously offered services similar to those of Megaupload, has limited the downloading of files to those who uploaded them initially - presumably in reaction to the case against Megaupload.

"All sharing functionality on FileSonic is now disabled," reads a statement on the site. "Our service can only be used to upload and retrieve files that you have uploaded personally."

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Latest comments (18)

gi biz ;, 6 years ago
"FileSonic, which had previously offered services similar to those of Megaupload, has limited the downloading of files to those who uploaded them initially"
Once again, this is the best time to measure. I expect sales stats to be publicly available as soon as possible, to give us some numbers the next time we debate on whether piracy is an issue or not.
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Andrew Goodchild Studying development, Train2Game6 years ago
Forgetting the extradition for a minute, surely holding passports under psuedernoms is an offence in itself?
I wouldn't think it would strenghen his argument that he's done nothing wrong either, as why was he expecting to need them for except to disappear?

Edited 1 times. Last edit by Andrew Goodchild on 23rd January 2012 1:45pm

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John Donnelly Quality Assurance 6 years ago
Apparently to get his NZ residency he had to agree to invest NZ$10 and this was after declaring his background and all.
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Show all comments (18)
Neil Young Programmer, Rebellion Developments6 years ago
@andrew probably not, unless there's more than one for the same country - as long as each name was legally correct for each issuing country.

Hardly surprising the judge wants extra time to work through it all...
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James Ferris buying assistant 6 years ago
sales will not increase why spend 15+ on a blu ray when in a month time it will be lowered or put with buy two for 15 sure piracy is an issue but it is the retailers that contribute to the sales figures of over priced new releases
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Jim Armstorng Franchise Development Director, EA Romania (EA Canada)6 years ago
Blaming retailers or their prices is a spurious arguement - it is theft. If you don't like the price buy another game or product. We would never use this arguement to justify shop lifting, so to use it to justify digital theft is just as ridiculous.
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Steve Edwards6 years ago
I agree with Jim, because making a digital copy of some data is IDENTICAL to removing someone's physical possesion from a shop.

Edited 1 times. Last edit by Steve Edwards on 23rd January 2012 4:33pm

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Nicholas Pantazis Senior Editor, VGChartz Ltd6 years ago
@ Jim

Piracy is bad, and illegal, but can we please stop with the "theft" thing? That's not an argument with merit. The legal classification for what we call "piracy" is "copyright infringement of software." It is the illegal distribution of a digital copy of a product, rather than the removal of a physical product from one owner to another.

The reason this difference is important is because of potential profits vs actual loss of assets. A stolen item represents a loss of owned assets. Something was removed from you to be acquired by another person. A digital copy removed nothing from you other than potential profits. The key word there being potential. While undoubtedly some pirates would buy the game legitimately if piracy wasn't an option, far more pirates would never buy the game at all, as has been shown by a number of peer reviewed studies.

I'm not defending the practice of piracy, as it is absolutely a crime and morally objectionable practice. But, I am calling it a scapegoat that publishers use to avoid bigger issues of bloated development budgets and poor management of sales expectations, marketing, and distribution channels. If you want to fight piracy, stop using DRM and stop attacking the pirates. Simply offer them a better value and experience if they purchase legitimately. Why do you think Steam is so successful? It makes tons of sales off of pirates who otherwise wouldn't purchase software because of great sales, great service, and a great end-user experience.

Piracy arises from a lack of value and service. Most pirates aren't hateful criminals, but people looking to play games within a budget through convenient channels. Services like Netflix, Hulu, Steam, iTunes, Pandora, and Spotify make far more progress on increasing sales and reducing piracy in their respective industries than any DRM ever has. DRM treats your consumers like criminals and pirates like kings (as they get the non-broken versions).

Fight piracy with value, not legal attacks. Go TO the market, and provide something better than they're getting from their cracked torrents through great service and a great end-user experience for legitimate consumers.
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Mihai Cozma Indie Games Developer 6 years ago
I agree with Jim. If I don't want to spend that much on a product, I better wait until its price decreases to the point I afford it. I don't really feel the need to consume some entertainment media exactly when it is out on the market, like all the victims of the hype around it actually do. The only exception are online based games, but even those are so few that interest me that I can afford to make such exceptions (1-2 a year).
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Andy Russell Programmer, Blitz Games Studios6 years ago
Nicholas, I couldn't agree more. It infuriates me that the music and film industry is claiming a direct loss of sales in the region of $500 million dollars due to MU. It's an idiotic thought that 100% of the pirated copies would of been bought if MU didn't exist, be realistic. Sure it's wrong and illegal and it shouldn't of happened but they have NOT lost $500 million dollars! Ubisoft introduced a rock hard DRM, anti-piracy SUCCESS! ah, hold on revenues down by 90% *scratch head* where's your lost revenue from pirates now?!
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Benn Achilleas CEO and Founder, Playabl6 years ago
I started typing a long answer then re-read and realised how incriminating it all sounded - despite me being very legal. This is a murky area.
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Christian Roth Mediapsychologist 6 years ago
If you followed "Mr. Dotcom's" history of fraud you just wonder how hard-boiled and also crazy this guy is. I would watch a free online movie of his career ;-)
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Klaus Preisinger Freelance Writing 6 years ago
Considering the sites you find when you google for Megaupload, I found $500 million to be an unusually small amount. It is, as if the amount of money was intentionally chosen so low that it becomes a real bargaining chip for some good old bartering justice. Nobody in the industry is stupid enough to believe they will get $500 million out of this law suit. They just want control over Megaupload to shut it down and keep it shut.

Also remember, if you are openly threatening politicians with withdrawing your financial support on television....
[link url=

We will most likely see the same thing we saw in the music industry. The artists remain, the distributors get slaughtered. In the music industry the revenue model shifted from "CD sales > concert revenue > merchandise" to "concert revenue > merchandise > retail sales." Did that hurt musicians? No. Did that hurt everybody else earning money off them? You bet. Do Hollywood distributors know that? You bet. What are they gonna do? Teeth and claw.
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Tom Zelinski Co-Founder & Member, Board of Directors, Simutronics Corp.6 years ago
I agree that the "proper" legal term are both the infringement(s) of one's (or a company's) copyrights and trandemarks - both at the national and international level -- no matter which media is used. As a personal example, I've been a freelance concert photographer for nearly 35 years and none- read NONE - of my work is on the Internet. Am I losing money? Obviously. What is more important? My Money or My Material? Like, for instance, the only known photos of Zep's Bohnam in the last LedZep Concert (in West Berlin, 1983).

Yes, here in the USA, I can stop by my friendly US Trademark/Copyright office and spend Hundreds of USD, include the lastest and greatest photographic watermarking that the photographic industry has to offer (Vers. X.X) and in one hour find it on an international Social network somewhere - Guaranteed.

Personally, I would rather make 25 signed original copies and give them away as gifts to deserverving and trusted friends.

Photographs, Songs, Programs... "The Song Remains the Same." "And, Ain't it a Shame"...

-- TAZ

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Paul Shirley Programmers 6 years ago
I'll echo comments from elsewhere: they managed this without SOPA or PIPA. Seems they don't even need the tiny sliver of legitimate law in either of them nevermind the 'licence to abuse' they're wrapped in.

Oh well, I have little doubt MegaUpload is guilty of enough to deserve this (despite the frankly bizarre and overreaching list of claims being made - not having a search option illegal?), it was often the most reliable mirror for Android firmware downloads - perfectly legal downloads BTW.

Better not be the start of an rushed and overeager crusade or this will hurt a lot of innocent users.
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Mark Gilbert Games Designer, Abstraction Games6 years ago
I post this only as a question relating to a RUMOR that I read elsewhere please read it as such:

Do you think this has anything to do with the fight with Universal over them illegally using their power to take down the advertising song MegaUpload had created?

[link url=

The rumor is they used their muscle to persuade the FBI to act, it seems a little strange there was not a lot of mention about this before (warnings, i haven't heard of any correct me if im wrong) and that they go after them instead of others?

Again i'd like to point out this is purely a rumor and I just wanted to hear other's opinions on this matter.
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gi biz ;, 6 years ago
@Jim: putting your head down and charging won't do any good.
As I said many times now this is a good moment to decide if, by spending so many discussions, efforts and money on this issue is going to save us from a second Amiga era or if we'd be just as fine.
Laws are there but need not be enforced. Just to give you an example, did you know that in nowdays France "any woman wishing to dress like a man must seek special permission from police and provide medical justification for showing their legs", as states the law? I guess it's not actively enforced as it was in 1800 though, as society evolved so that it's not worth caring anymore. I bet this makes you smile.

I think that finally gathering some data to get a more realistic rate of 100% lost sales in illegal downloads is anything but dumb. We can then continue those lovely discussions or just concentrate our attention elsewhere. Although I see why publishers would keep on fighting, in spite of everything.
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James Ferris buying assistant 6 years ago
going on my previous comment i didnt say that illegal download was right as the high prices for instore

there needs to be a compromise why pay around 10 to watch a movie once at the cinema , it would be better with that 10 ticket you get a digital copy of the movie when it was released or at least some money off

why is anyone going to spend 26 in total to watch the movie at the cinema then own the movie when it comes out to purchase
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