Popular file sharing site MegaUpload has been shut down by federal authorities today who executed an indictment against the company and its founder. The indictment claims that the site was responsible for $500 million in losses to copyright holders due to music and movie piracy. Kim Dotcom, founder of MegaUpload maintains that his company has obeyed all due diligence requirements in regards to piracy issues.

For those who have not used MegaUpload, it’s a service that allows its users to upload files that would be too large to send in an email for temporary hosting. The user can then distribute a link to recipients so they can download the files. While this is a totally legitimate practice, MegaUpload was also being used by pirates to upload movies, TV shows, and albums for free distribution. Added to this fact is the issue that MegaUpload has two membership tiers, free and premium. The company collected fees from premium members in exchange for faster download speeds and longer storage times. Because the company got paid for hosting and distributing pirated content, it was open to indictment for piracy charges as well.

Founded in 2005, MegaUpload has been an interesting site to watch in relation to the ongoing global debate about online piracy. Dotcom has been working feverishly to maintain that his company and business is legitimate due to the amount of legal traffic happening on MegaUpload. Going so far as to leveraging endorsements from artists like Alicia Keys who was a victim of piracy on his site, Dotcom knew that MegaUpload was facing trouble but looking to put a good face on the issue.

Although the company was incorporated in Honk Kong, it holds servers in Virginia, giving the US the needed jurisdiction to perform the seizure.

Coming just one day after many sites around the globe shut down to protest the SOPA and PIPA bills that are being deliberated in the US Senate, the timing of the raid is interesting. More on this story as it breaks.

Read more at the Associated Press