TorrentFreak Email Update

Megaupload Worked on a Multi-Billion Dollar IPO
Impressions From The Pirate Parties International Conference
Pirate Party Sues Hollywood Backed Group over Pirate Bay Censorship

Megaupload Worked on a Multi-Billion Dollar IPO

Posted: 17 Apr 2012 03:51 AM PDT

wall street sign According to a US indictment, Kim Dotcom and the rest of the “Mega Conspiracy” were running a criminal operation.

They are accused of engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement.

These are strong accusations that could potentially result in two decades of jail time for the people involved but according to Kim Dotcom, the charges are “nonsense.”

In recent years Megaupload surrounded itself with some of the best lawyers who all guaranteed that the company was operating a legitimate business. In fact, Kim Dotcom informs TorrentFreak that his company was planning to enter the US stock market through one of the largest tech IPOs in history.

Megaupload was negotiating with the world’s top accountancy firms to become auditors and large international banks were interested in underwriting the public offering. Aside from an IPO, Megaupload also researched the option of becoming publicly listed through a reverse merger, where it would buy an already listed company.

Hong Kong-based corporate advisor Robert Lim was asked by Megaupload management to help advise on this endeavor, and he agreed to give us some more background on the work that was done up until the raids in mid-January.

“I started providing advice to Megaupload management on exploring and researching options on becoming publicly listed by IPO or back door listing and other fund-raising options in early 2011,” Lim says. “I understand the management and some of the shareholders had been discussing and exploring these options even prior to this time.”

Preparing an IPO is not an easy or quick process, but Megaupload had serious intentions and was talking with several of the "Big Four" auditors.

“Megaupload management had discussion with a number of the ‘Big Four’ largest international professional accountancy firms , which handle the vast majority of audits for publicly traded companies. These Big Four firms were invited to be the auditor and to work together with management to build out a road map to prepare Megaupload for an IPO,” Lim explained.

“This included any management and corporate restructuring to enhance efficiency and management of the group, and to review and enhance internal controls and corporate governance processes in the company as needed. Basically, some of the essential key things private companies need to do to prepare for public listing.”

In other words, the auditors would conduct a thorough review of Megaupload on virtually all aspects, which is not generally something a criminal operation would be interested in.

Besides cooperating with the top audit firms, Megaupload also approached several of the world’s leading investing banks to assist with the IPO plan. According to Lim the list of banks included those experienced in taking technology companies to the stock market.

In an earlier conversation with TorrentFreak, Megaupload’s Kim Dotcom mentioned several of the interested parties by name (withheld from publication). Lim confirmed that the banks Megaupload talked to were very open to the IPO plan, which he believes could have been very successful.

“Most of the response was positive. As long as Megaupload provided the commitment and flexibility to follow the necessary road map recommended by the professional firms to prepare the company for an IPO, it should not have been a problem.”

Just how successful the plan could have been becomes apparent when the numbers come into play. As a profitable company that generated a healthy profit in its short existence, the company was looking at a multi-billion dollar valuation.

“Despite the global economic downturn, the tech sector still seems to be providing the most successful IPOs. Therefore, underwriters said Megaupload had a good chance to be a very successful IPO, with an estimated valuation of at least a couple of billion US dollars,” Lim told us.

After all, Megaupload was a reasonably large and very fast growing tech company and also a leader in its sector. Furthermore, unlike many high-profile tech companies going for an IPO including some video file sharing companies that had successful IPOs, Megaupload was profitable.

However, this bright future was shattered early 2012 when the US authorities shut down Megaupload and arrested several people connected to the site.

Lim was shocked by the news, and he believes that the IPO plan is an indication that the company isn’t really the criminal conspiracy the US authorities claim it to be.

“Objectively speaking, for the criminal case it brings up the question if there really was a so-called ‘Mega-Conspiracy’ among Megaupload management. It is clear Megaupload management was seriously exploring options for taking the company to public listing,” Lim told us.

“They also knew full well that it would require a lot of scrutiny, due diligence and review of the operations, financials and overall business model of Megaupload not only by the auditors / accountants, lawyers for regulatory filings and IPO underwriters, but also the various regulatory agencies which govern the stock exchanges and public markets.”

“This does not fit with the ‘Mega-Conspiracy' concept that Megaupload management is accused of, including that they knowingly and secretly conspired to do and hide criminal activities in Megaupload,” Lim adds.

These revelations do indeed raise many questions, including whether the US government was aware of Megaupload’s plans.

It seems likely that the Megaupload legal team will reference the company’s extensive plans to enter the stock market in their upcoming defense. While it doesn’t answer the question of whether Megaupload’s operators are guilty or not, it does show that the company believed it was legitimate and wasn’t trying to hide anything.

Source: Megaupload Worked on a Multi-Billion Dollar IPO

Impressions From The Pirate Parties International Conference

Posted: 16 Apr 2012 02:16 PM PDT

I think this is partly because how we are redefining politics – as in the literal meaning of the word. When people hear “politics”, they usually think of the previous generations of politicians bickering over minute details in boring sections of the welfare systems – things that just don’t apply to people’s ordinary lives.

All of a sudden, the Pirate parties are making it possible to vote for the defense and enrichment of the connected lifestyle, which is relevant to the core for the net generation. Thus, because you can vote for it, by definition, it becomes politics – which it wasn’t before.

I guess that’s why it took a long time for me to reconciliate with the fact that i’m a politician. I grew up knowing that politicians are boring, pretentious and infighting. It is only with the expanded use of the word that it makes sense that fighting for civil liberties is, in fact, policymaking. And those of us who fight for net liberty have become politicians, as people can vote for us to… fix things.

Politicians have been de-pedestalized. And that’s good every part of the way.

Say Arrrr

pirates

I’ve understood that a lot of US readers misread me when I say that 9% in an election is a sensation. That’s because the United States and Europe have completely different election systems: in the United States, if you take 9% of the votes, you are crushed, down and out. In (most of) Europe, when you take 9% of the votes, you get 9% of the seats.

That’s why it is fantastic that the German Piratenpartei is polling at 13% and that several more are on the verge of breaking through.

I was struck at the meeting by how many new Pirate parties are on the rapid rise: Estonia, Lithuania, Poland, Greece, Slovenia, Slovakia, Serbia, the list goes on.

When I was at last year’s PPI meeting, I confided in some people that I thought we could approach 15% long-term. If somebody had told me we’d be there in 12 months, I would not have believed them. Would Not. Things are progressing much faster than I have anticipated.

As I held the closing keynote, I noted that two countries are currently polling at parliamentary levels – Germany and Austria – and made a bold prediction: one year from today, between two and five more countries’ Pirates will be polling at parliamentary levels, meaning they’d enter their parliaments if elections were held.

Czech media was everywhere during the international meeting. The Greek Pirates are polling at one percent, just three months after founding. PP Luxembourg is showing clear signs of making the next election.

And as I flipped open my Android netbook to write the summary of the meeting, I learned that the Austrian Pirate Party had just taken its first parliamentary seat, in the local election of Innsbruck.

This journey is great to be part of.

About The Author

Rick Falkvinge is a regular columnist on TorrentFreak, sharing his thoughts every other week. He is the founder of the Swedish and first Pirate Party, a whisky aficionado, and a low-altitude motorcycle pilot. His blog at falkvinge.net focuses on information policy.

Book Falkvinge as speaker?

Follow @Falkvinge

Source: Impressions From The Pirate Parties International Conference

Pirate Party Sues Hollywood Backed Group over Pirate Bay Censorship

Posted: 16 Apr 2012 07:30 AM PDT

pirate party logo The legal battle over Internet censorship is heating up in the Netherlands, as the local Pirate Party is now suing anti-piracy group BREIN.

Two weeks ago BREIN ordered the Party to take down a reverse Pirate Bay proxy. The site allowed subscribers of two Dutch Internet providers to bypass a court ordered blockade of the notorious torrent site, and BREIN argued that the proxy was sabotaging this order.

Initially the Pirate Party refused to give in to the demands, but when they were confronted with an injunction from the court right before the weekend they had no other choice than to comply. The Pirates took down the reverse proxy and replaced it with a protest page linking to dozens of other ways people can access The Pirate Bay.

On Saturday, BREIN sent a follow-up letter urging the Party to take down these links as well, including the Party’s generic proxy. However, aside from removing the hyperlinks, the Pirates rejected these demands. Instead, they have now announced that they will sue the anti-piracy group.

“By dragging BREIN to court, the Pirate Party finally has the chance to put forward arguments to strike the court injunction that was unilaterally imposed on it last friday by Dutch entertainment industry organization BREIN,” the Party announced today.

Through the courts the Pirate Party hopes to get the ex parte injunction overturned. The Party argues that they have the right to be heard, and say that the court allowed BREIN to take justice into their own hands by adding extra demands under threat of draconian penalties.

“It is time that the industry attack dogs understand that you can’t trample on people’s freedoms for your own monetary gain,” Pirate Party board member blauwbaard says.

“Today we’ll try to explain to the judge how giving BREIN one blocking instrument causes them to stretch it in unjust ways to stifle free speech and the free flow of information. Paraphrasing Victor Hugo, nothing is more powerful than an idea whose time has come,” he adds.

The Pirate Bay case is keeping BREIN busy this month as the group is also taking two new Dutch Internet providers to court to expand the local blockade.

The Pirate Party is glad that finally they will be able to strike back at their nemesis. Freedom of speech and an Open Internet are two core issues of the Party which they are eager to defend.

“The Dutch Pirate Party calls upon all pirates and freedom-loving landlubbers to stand up and support our fight against censorship. Because as Martin Luther King might have said it, were he alive today, ‘freedom on the Internet is indivisible, a threat to freedom of the Internet anywhere is a threat to freedom on the Internet everywhere’,” they state.

Update: Adding fuel to the fire, the prominent Dutch weblog Geenstijl created a proxy redirector at FuckTimKuik.org. Ouch.

Source: Pirate Party Sues Hollywood Backed Group over Pirate Bay Censorship

The Pirate's Press

Tuesday, 17 April 2012