FBI Wins Skirmish in War on Dotcom

Kim Dotcom experienced a legal setback late last week when the New Zealand Court of Appeal overturned a lower court ruling that had required the U.S. Federal Bureau of Investigation to disclose all of its evidence against him.

However, his fight to avoid extradition is nowhere near closure. Nor has the legal battle curbed his entrepreneurial activities — Dotcom is searching for a CFO to take Mega, his new online endeavor, public.

The Extradition Case

Dotcom is the notorious founder of Megaupload, which was shut down by U.S. authorities last year, following indictments for piracy against Dotcom and other Megaupload execs. Financial assets were seized, and a spectacular raid was carried out at his New Zealand mansion.

Since then, U.S. officials have been trying to have the New Zealand resident extradited to stand trial in the states. The case has been winding its way through the country’s legal system, with issues such as the legality of the raid and Dotcom’s right to view evidence against him under debate. Essentially, the Court of Appeal said the extradition hearing is not the equivalent of a criminal trial, and Dotcom does not have the same rights that he would if it were.

This is hardly the end of the legal trail, though. Dotcom is expected to appeal his case all of the way to New Zealand’s highest court. Legal opinions differ on whether he will ultimately be brought to the U.S. to face charges. Dotcom’s next extradition hearing is scheduled for August 2013.

In most countries, including New Zealand, copyright violations are not a criminal matter, Jeff Ifrah, founder of Ifrah Law, told the E-Commerce Times.

“The concept of online piracy being a criminal issue — that is a reflection of Hollywood and the entertainment industry’s ability to lobby Congress to pass strict laws,” he said.

Still, the Court of Appeal decision will likely stand, said Ifrah.

“Unfortunately, what the trial judge said about New Zealand’s approach to copyright law is very inconsistent” with the country’s extradition treaty, he added.

In Search of a CFO

Dotcom, for his part, is showing little sign of angst. Instead, he appears to be focusing on his new endeavor, Mega, a site that surely must strike U.S. prosecutors as interesting and relevant to their original case.

Dotcom launched Mega at the start of the year with much fanfare. Among its chief claims is that it uses “state of the art browser-based encryption technology where you, not us, control the keys.”

Reading between the lines, one could infer that Mega is trying to woo users who would like to fly under the radar of prosecuting organizations. Dotcom is seeking a CFO to help take the site public some time in 2013.

How Mega Works

Based on its specs, Mega would indeed appeal to Internet users who would prefer to control outside access to their files, Tim ‘TK’ Keanini, chief research officer for nCircle, told the E-Commerce Times.

“The Mega service uses 2048-bit encryption by RSA, and according to this blog post by DigiCert; it would take 1.5 million years to crack with a standard desktop computer.” he pointed out.

“Mega provides a public/private key system. Users can encrypt files their own files with a private key, but anyone they give the public key to can decrypt them,” Keanini continued. “If users are careless with their keys by emailing them in plain text, their data will be far less secure on this site. If they control access to their keys, then this site is pretty secure.”

It’s unclear whether Mega stores the keys anywhere on its servers, he said, “but if they don’t, it will make seizing the servers or intercepting traffic largely useless.”