[1] Acting upon a US Federal prosecutor's request, the New Zealand Police arrested Dotcom and three other Megaupload executives in a leased $30 million mansion at Coatesville near Auckland on Friday, 20 January 2012 (NZDT, UTC+13).
Judge David McNaughton expressed concern at the discovery of two shotguns at Dotcom's mansion during the police raid,[11] and deferred a decision on whether to grant bail, saying that he needed more time to review the submissions.
[12] The request for bail was turned down, with Judge McNaughton saying that "he was denied due to the risk [that] Mr. Dotcom would flee jurisdiction and the possibility that if he reached Germany he wouldn't be extradited to face the charges".
[14] On 22 February 2012, North Shore District Court Judge Nevin Dawson overturned the previous rulings and granted bail to Kim Dotcom,[15] saying that the risk of flight had diminished after his assets had been seized.
[16] On 5 March 2012, a formal request for the extradition to the United States of Kim Dotcom and three other senior Megaupload staff was filed in a New Zealand court.
[17] On 30 April 2012, the New Zealand High Court ruled that around $750,000 of Kim Dotcom's assets could be returned, including a Mercedes-Benz G55 AMG and Toyota Vellfire that had been seized during the raid on his home.
During April 2012, US district court judge Liam O'Grady stated "I frankly don't know that we are ever going to have a trial in this matter," as he found out that the company had never been formally served with criminal papers by the US.
"[20] On 10 July 2012, a decision on whether Kim Dotcom and other Megaupload employees should be extradited to the United States was delayed until March 2013, in order to allow further time for legal arguments to be heard.
[27] On 8 September 2014, the Court of Appeal ruled that the New Zealand Police is to return seized electronic devices unencrypted back to Dotcom and those involved.
Rothken claims that the raid was unjustly swift and did not give his client the opportunity to defend himself, quoting a similar case involving YouTube as an example of a completely different turnout.
The legal concerns included: The US Digital Millennium Copyright Act provides safe harbor for sites that promptly take down infringing content.
[37] In a television interview with 3 News, Kim Dotcom denied being a "piracy king", and claimed that Megaupload had applied the provisions of the DMCA and went beyond it, by giving copyright holders direct rights to delete links.
[38] Kim Dotcom denied the charges filed against him, and retained the services of Ira P. Rothken, an attorney who has defended several copyright infringement cases.
[45] Eric Goldman, a professor of law at Santa Clara University, described the Megaupload case as "a depressing display of abuse of government authority".
[47] Professor James Grimmelmann, for example, commented, "If proven at trial, there's easily enough in the indictment to prove criminal copyright infringement many times over.
In a judgement in the end of May, NZ Judge David Harvey granted the defendants the right to the disclosure of evidence against them held by the FBI in preparation for the extradition trial.
[49] In his 81-page decision, he came to the assessment that the DoJ is attempting to use concepts of civil law, in particular secondary copyright infringement, in a criminal case, which creates legal issues.
"[52] On May 9 2022 Two Megaupload officers Mathias Ortmann and Bram van der Kolk accused by US authorities with racketeering and other crimes in connection announced that they had reached an agreement to avoid extradition to the US in return for facing charges in New Zealand.
[65] Links posted in chatrooms and on Twitter, when clicked on by unsuspecting Internet users, ran a web version of the application known as the Low Orbit Ion Cannon.
[70] Web organisations have raised concerns about possible effects of the Megaupload case on the future of file sharing, cloud storage, and Internet commerce.
[71][72][73] Various commentators including John C. Dvorak, Glenn Greenwald, and Julian Sanchez have written on the topic as well, particularly as it relates US government powers to take down a web site without a trial, even without new laws like SOPA.