A recording of Kim Dotcom and several Universal Music executives captured two days before the Megaupload raids has revealed the label planning to do a deal with the entrepreneur. Amid discussion of ‘taxing’ Google by diverting its ad revenue to the label, the execs offered to downgrade Dotcom from “evil” to “neutral” in return for dropping legal action over the “Mega Song”.
Source: Universal Music and Kim Dotcom Prepared a Deal to Tax Google – TorrentFreak
This also ensures that Dotcom won’t have money to defend himself…
Following the 2012 raid on Megaupload and Kim Dotcom, U.S. and New Zealand authorities seized millions of dollars in cash and other property.
Claiming the assets were obtained through copyright and money laundering crimes, last July the U.S. government launched a separate civil action in which it asked the court to forfeit the bank accounts, cars and other seized possessions of the Megaupload defendants.
Megaupload’s defense heavily protested the request but was found to have no standing, as Dotcom and his colleagues can be seen as fugitives.
A few hours ago District Court Judge Liam O’Grady ordered a default judgment in favor of the U.S. Government. This means that the contested assets, which are worth an estimated $67 million, now belong to the United States.
“It all belongs to the U.S. government now. No trial. No due process,” Dotcom informs TF.
More than a dozen Hong Kong and New Zealand bank accounts have now been forfeited including some of the property purchased through them. The accounts all processed money that was obtained through Megaupload’s alleged illegal activities.
Following a series of High Court orders six UK ISPs are required to block subscriber access to many of the largest pirate sites.
The efforts started in 2012 and the list continued to grow in the years that followed.
In a new wave the BPI, which represents the major record labels, has teamed up with music licensing outfit Phonographic Performance Limited to obtain an order targeting a series of MP3 download sites.
This latest round expands the UK blocklist by 17 MP3 download sites, including stafaband.info, rnbxclusive.se, plixid.com and mp3.li. It brings the total number of blocked sites over a hundred, 110 to be precise.
Nearly all of the newly blocked sites are so-called MP3 search engines. However, the list also includes megasearch.co, a website that allows users to find files on the Mega cloud storage service founded by Kim Dotcom.
September last year the Digital Citizens Alliance and NetNames released a report that looked into the business models of “shadowy” file-storage sites.
Titled “Behind The Cyberlocker Door: A Report How Shadowy Cyberlockers Use Credit Card Companies to Make Millions,” the report offers insight into the money streams that end up at these alleged pirate sites.
The research claims that the sites in question are mostly used for copyright infringement. But while there are indeed many shadowy hosting services, many were surprised to see the Kim Dotcom-founded Mega.co.nz on there.
For entertainment industry groups the report offered an opportunity to put pressure on Visa and MasterCard. In doing so they received support from U.S. Senator Patrick Leahy, who was also the lead sponsor of the defunct controversial Protect IP Act (PIPA).
Senator Leahy wrote a letter to the credit card companies claiming that the sites mentioned in the report have “no legitimate purpose or activity,” hoping they would cut their connections to the mentioned sites.
Visa and MasterCard took these concerns to heart and pressed PayPal to cut off its services to Mega, which eventually happened late last month. Interestingly, PayPal cited Mega’s end-to-end-encryption as one of the key problems, as that would make it harder to see what files users store.
The PayPal ban has been a huge blow for Mega, both reputation-wise and financially. And the realization that the controversial NetNames report is one of the main facilitators of the problems is all the more frustrating.
TorrentFreak spoke with CEO Graham Gaylard, who previously characterized the report as “grossly untrue and highly defamatory,” to discuss whether Mega still intends to take steps against the UK-based NetNames for their accusations.
Initially, taking legal action against NetNames for defamation was difficult, as UK law requires the complaining party to show economic damage. However, after the PayPal ban this shouldn’t be hard to do.
Gaylard is traveling through Europe at the moment and he notes that possible repercussions against the damaging report are high on the agenda.
“Yes, I am here to see Mega’s London-based legal counsel to discuss the next steps in progressing the NetNames’ response,” Gaylard informs TF.
Mega’s CEO couldn’t release any details on a possible defamation lawsuit, but he stressed that his company will fiercely defend itself against smear campaigns.
“Mega has been operating, and continues to operate a completely legitimate and transparent business. Unfortunately now, with the blatant, obvious, political pressure and industry lobbying against Mega, Mega needs to defend itself and will now cease taking a passive stance,” Gaylard says.
According to the CEO Mega is running a perfectly legal business. The allegation that it’s a piracy haven is completely fabricated. Like any other storage provider, there is copyrighted content on Mega’s servers, but that’s a tiny fraction of the total stored.
To illustrate this, Gaylard mentions that they only receive a few hundred takedown notices per month. In addition, he notes more than 99.7% of the 18 million files that are uploaded per day are smaller than 20MB in size, not enough to share a movie or TV-show.
These statistics are certainly not the hallmark of a service with “no legitimate purpose or activity,” as was claimed.
While the PayPal ban is a major setback, Mega is still doing well in terms of growth. They have 15 million registered customers across 200 countries, and hundreds of thousands of new users join every month.
In the wake of the now-famous 2012 raid, the U.S. government has done everything in its power to deny Kim Dotcom access to the assets of his former Megaupload empire. Millions were seized, setting the basis for a legal battle that has dragged on for more than three years.
In a July 2014 complaint submitted at a federal court in Virginia, the Department of Justice asked for forfeiture of the bank accounts, cars and other seized possessions, claiming they were obtained through copyright and money laundering crimes.
“Kim Dotcom and Megaupload will vigorously oppose the US Department of Justice’s civil forfeiture action,” Dotcom lawyer Ira Rothken told TF at the time.
But in the final days of last month Dotcom received a blow when a ruling from the United States barred him from fighting the seizure. A Federal Court in Virginia found that Dotcom was not entitled to contest the forfeiture because he is viewed as a “fugitive” facing extradition.
“We think this is not offensive to just Kim Dotcom’s rights, but the rights of all Kiwis,” Rothken said.
Wasting no time, yesterday the United States went in for the kill. In a filing in the District Court for the Eastern District of Virginia, the Department of Justice requested an entry of default against the assets of Kim Dotcom plus co-defendants Mathias Ortmann, Bram van der Kolk, Finn Batato, Julius Bencko, and Sven Echternach.
The targets for forfeiture are six bank accounts held in Hong Kong in the names of Ortmann, der Kolk, Echternach, Bencko and Batato. New Zealand based assets include an ANZ National Bank account in the name of Megastuff Limited, an HSBC account held by der Kolk and a Cleaver Richards Limited Trust Account for Megastuff Limited held at the Bank of New Zealand. Two Mercedes-Benz vehicles (an A170 and an ML500) plus their license plates complete the claim.
The request for default judgment was entered soon after.
The world could really need a credible alternative to PayPal
There are way too many stories of Paypal unfairly and ridiculously cutting off services that rely on it as a payment mechanism, but here’s yet another one. Mega, the cloud storage provider that is perhaps well-known for being Kim Dotcom’s “comeback” act after the US government shut down Megaupload, has had its Paypal account cut off. The company claims that Paypal was pressured by Visa and Mastercard to cut it off:
Visa and MasterCard then pressured PayPal to cease providing payment services to MEGA.
MEGA provided extensive statistics and other evidence showing that MEGA’s business is legitimate and legally compliant. After discussions that appeared to satisfy PayPal’s queries, MEGA authorised PayPal to share that material with Visa and MasterCard. Eventually PayPal made a non-negotiable decision to immediately terminate services to MEGA. PayPal has apologised for this situation and confirmed that MEGA management are upstanding and acting in good faith. PayPal acknowledged that the business is legitimate, but advised that a key concern was that MEGA has a unique model with its end-to-end encryption which leads to “unknowability of what is on the platform”.
MEGA has demonstrated that it is as compliant with its legal obligations as USA cloud storage services operated by Google, Microsoft, Apple, Dropbox, Box, Spideroak etc, but PayPal has advised that MEGA’s “unique encryption model” presents an insurmountable difficulty.
