Seventy police raided ten properties, arresting the site's founder and several executives, seizing extensive physical and property assets and $8 million from banking institutions. The group stands accused of making more than $175 million from illegal activities and denying copyright owners more than $500 million in revenues.
A statement issued by the FBI regarding the operation details the charges and potential ramifications for the accused.
"The individuals and two corporations - Megaupload Limited and Vestor Limited - were indicted by a grand jury in the Eastern District of Virginia on Jan. 5, 2012, and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement.
"The individuals each face a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering and five years in prison on each of the substantive charges of criminal copyright infringement."
Megaupload had operated by allowing users to upload files, largely music and video, which could then be downloaded by others from a uniquely generated URL. By paying a fee, users could become premium members and increase their download speeds - Megaupload's main source of income.
The site also had considerable revenues from its advertising inventory.
I don't know the ins and outs
Now, I could be wrong here and the guy could have done something wrong; I don't know. Just looking at it though, I don't see why he should take the fall for what other people did.
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.
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