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US says Mega v2 could breach Dotcom’s bail

By | Published on Tuesday 30 October 2012

Kim Schmitz

The American Department Of Justice has filed papers with the US courts arguing that if MegaUpload founder Kim ‘Dotcom’ Schmitz relaunches his file-transfer platform next year, as he is currently planning to do, he could put himself in breach of his bail conditions in New Zealand, and might face additional criminal charges.

Prosecutors in the States, who are trying to extradite Dotcom and three other former Mega execs, filed new legal papers after the Mega founder announced plans to launch a new file-transfer business that would offer very similar services to the original MegaUpload, which was shut down by the US authorities in January amidst allegations of copyright infringement, money laundering and racketeering.

Dotcom says that his new service, to be called Mega, will encrypt files as they are uploaded to his company’s servers. This would, in theory, make it harder for users to help themselves to unlicensed music and movie files stored in other user’s digital lockers, because they would need an unlock key to access that content.

And that would possibly make the new Mega less likely to become a prolific source of free but illegal music and movie files (which, US prosecutors argue, was by far the most popular and profitable element of the original MegaUpload).

Dotcom’s lawyers also reckon that, as the Mega company wouldn’t be able to see what files were stored on its servers once the auto-encryption system is in place, even if the whole thing did become a piracy haven once again (via the free trading of unlock codes), the business itself wouldn’t be able to distinguish between legit and illegitimate files, so could not be held liable for the storage of unlicensed content, as has happened in the criminal case against MegaUpload and its founders in the US.

Whatever, it’s not the specific legalities of Mega v2 that the DoJ is currently objecting to, rather the fact that Dotcom is involved in launching a new venture very similar to the one the American authorities shut down back in January. The US notes that, when applying for bail, after being arrested by the New Zealand authorities at America’s request at the start of the year, Dotcom said he had neither the motivation nor the means to relaunch MegaUpload.

Indeed, Techworld has published Dotcom’s exact words from January, when he told the New Zealand courts: “There is no realistic prospect or possibility of restoring the business or recommencing the business having regard to both the seizure of the requisite servers and data storage equipment and to the seizure of all funds, monies and assets held both by MegaUpload and by me personally. Further, it is likely that users would consider any new iteration of MegaUpload as inherently unreliable as it could be subject to a further incident in which the US government takes action to close the site down and thereby prevents users from having legitimate access to their data”.

But this month Dotcom has told his Twitter followers how programmers have been busy preparing Mega v2 for launch, how investors are lining up to fund the new business, and how the new service will be hosted out of the reach of the American authorities (or prosecutors or judges in any one jurisdiction) meaning users can be assured their files won’t disappear overnight.

In their court filing last week, the DoJ wrote: “Defense Counsel’s claim that the corporate defendant can and should be allowed to operate undermines the sworn statements of Dotcom that he has no plans or ability to continue to operate or fund the businesses in the indictment during pendency of the extradition process. If defendant Dotcom intentionally misled the court in New Zealand about his intentions and capabilities in order to obtain his release from pre-extradition confinement, it seems Defense Counsel’s representation might endanger Dotcom’s bail situation or even subject him to additional charges”.

Perhaps unsurprisingly, the Mega legal team has quickly rejected these new claims by American prosecutors, I think by arguing that the new Mega is sufficiently different from the old MegaUpload to mean the new business can be launched without Dotcom going completely back on his pledge to the New Zealand courts. Legal man Ira Rothken told reporters: “It sounds like the United States is attacking a technology before they fully investigate it. This looks to be the second time they’re doing that. Kim Dotcom is innocent, and he’s entitled to be involved in technology and business”.