Megaupload seeks return of millions in frozen Hong Kong assets

Hong Kong's Department of Justice has until June 4 to respond

Megaupload, the defunct file-storage site, is asking a Hong Kong court to release millions of dollars in assets as part of efforts to allow its former users to reclaim their data.

The company's assets were frozen by Hong Kong at the request of the U.S. Department of Justice around January 2012 after its operators, including founder Kim Dotcom, were indicted by U.S. prosecutors for allegedly profiting from large-scale copyright infringement.

On Wednesday, the High Court ordered Hong Kong's Department of Justice to respond to Megaupload's filing by June 4.

Megaupload attorney Ira Rothken said in a phone interview the move is part of a long-running effort to allow Megaupload to restart its servers so users can reclaim their data, unavailable since the site was shutdown.

The company has maintained that Hong Kong should have never seized the assets since the U.S. did not properly serve Megaupload with a criminal summons. U.S. federal criminal procedures dictate that a summons can only be served within the U.S., and the company was registered in Hong Kong.

Rothken said Megaupload waited more than two years to file such a request to give time for the U.S. District Court for the Eastern District of Virginia to rule on whether consumers can get their data back. The court has not addressed the issue since 2012, Rothken said.

"We are deeply concerned that as the days go by that consumers are being further and further prejudiced because they don't have access to their data," Rothken said. "We believe that the servers that still exist could be eroding."

Allowing consumers access to their data will cost money for bandwidth and hosting, Rothken said. But the greatest cost is having a qualified e-discovery contractor copy the servers to preserve the data as evidence at trial. The estimates Megaupload has solicited have been in the millions of dollars, he said.

Some of Megaupload's data is gone. One of its hosting providers, LeaseWeb in the Netherlands, repurposed servers allocated to Megaupload after efforts to secure payment were unsuccessful.

Rothken said Megaupload doesn't have "full transparency" on what data remains, although many servers that were located on the U.S. East Coast and Canada remain stacked in warehouses, with the U.S. DOJ in "constructive control," he said.

The U.S. is seeking extradition of Dotcom and his colleagues, Finn Batato, Mathias Ortmann and Bram van der Kolk. All remain in New Zealand where an extradition hearing is scheduled for July.

The men are charged with criminal copyright infringement, money laundering, racketeering and wire fraud.

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