The Kim Dotcom Saga, one year on – What you need to know

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Remember MegaUpload? Taken down last year by US law enforcement, the founder Kim Dotcom is planning to revive the site (under a new name, Mega.co.nz) on its one year anniversary. However what may seem like a technology story about copyright has transformed into a massive political scandal in New Zealand, especially on the spying and who knew what about it.

And just in time of Dotcom’s relaunch of Mega, here is what you need to know about the entire saga – just in case you have been living under a rock for the past year (or worried about the so-called Mayan prophecy).

Featured Image, Top Image: Kim Dotcom’s Twitter (@kimdotcom)

Who is Kim Dotcom?

Kim Dotcom, or Kim Schmitz, is a 38-year-old German-born Internet entrepreneur, known for his hacking past as a teenager, his height, the company MegaUpload, being (formerly) the number one player on Modern Warfare 3, and his lavish lifestyle. And yes, his last name is indeed “Dotcom”, he legally changed it in 2005.

His lifestyle has been noted across the technosphere for some years now; in fact, he made his own ‘documentary’ (as Ars Technica puts it) of his 2001 lavish trip to the Monaco Grand Prix, paying US$1 million for a 240-foot luxury yacht for a week, and throwing lavish parties that included Prince Ranier of Monaco as guests. We also know that he owns or used to own a Challenger jet, a helicopter, and 18 luxury cars – three with licence plates that feature such words as “HACKER”, “MAFIA” and “STONED”.

So, how did he make his money? MegaUpload only started in 2005, when he was living in Hong Kong. He previously had a security consulting company called Data Protect, and managed to get a security contract with German airline Lufthansa by showing off a security vulnerability (though, SecurityFocus says that he had an accomplice to break into Lufthansa’s network). In 2000, he sold an 80 percent stake into the company to a German conglomerate. Data Protect went bust in 2001.

Also in 2001, Dotcom purchased 375,000 euros in shares of a nearly-bankrupt LetsBuyIt.com; and announced he would invest another 50 million euros. That price surged up 220% to close at 77 cents. Dotcom, however, quickly sold those shares and made a profit of 1.5 million euros. He would be later charged with insider trading – though, some say it could have been ignorant about it, since Germany only criminalised the practice back in 1995 – and “fearing for his life”, left Germany for Thailand.

Once found to be living in Thailand, he was soon arrested and deported back to Germany to face charges of insider trading. However, he basically got a “slap on the wrist”, according to BusinessWeek. He received a 20-month suspended sentence after just five months in jail. He also received another two years of probation after pleading guilty to embezzlement charges over a “loan” to another company tied to him. After that, he promptly left Germany to Hong Kong.

The Birth of Megaupload

In 2003, Kim Dotcom invested US$250,000 into a company called Trendax, an “artificial intelligence-driven” hedge fund that promised returns up to 25 percent thanks to its “complex combination of sophisticated technical analysis, real-time content analysis of news feeds, multi-dimensional statistical analysis and advanced proprietary mathematical techniques”. However, the office’s address was a virtual office and the fax line was a shared one.

However, while it was registered as a business in Hong Kong, it could not accept investments or conduct trades as it was never registered with the US’ Securities and Exchange Commission, or the Hong Kong equivalent. He would later be fined 8000 Hong Kong dollars for not disclosing his shareholding levels.

Meanwhile, Dotcom also registered Data Protect Limited – at the same time he registered Trendax. It soon changed its name in 2005 to “Megaupload”, with its owner being “Vestor Limited” – also owned by him, and created by using his Finnish passport under the pseudonym “Kim Tim Jim Vestor”. However, Dotcom’s involvement with the company would not be known until 2007, and his role as founder was not revealed until 2011.

Megaupload would quickly become the file-sharing powerhouse, commanding at slightly more than two-thirds of the market. It boasted that it accounted for 4% of all internet traffic, and had 50 million daily visitors. It makes, reportedly, $175 million since 2005.

But, most people would remember Megaupload for being behind “The Mega Song” in 2011, showing artists such as will.i.am and Alicia Keys (and other celebrities like Kim Kardashian – wait, seriously?) endorsing the company. It was be quickly removed by YouTube because of a takedown request by Universal Music, before being reinstated.

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