Kim Dotcom's Pretrial Legal Funds Would Be Safe With Bitcoin

[Eugen Leitl]

http://www.forbes.com/sites/jonmatonis/2012/07/12/kim-dotcoms-pretrial-legal-funds-would-be-safe-with-bitcoin/

Kim Dotcom's Pretrial Legal Funds Would Be Safe With Bitcoin

The Megaupload case may end up having a chilling effect on pretrial asset
seizure. Yesterday Kim bDotcomb Schmitz, founder of Megaupload, asked his
Twitter followers for some better payment alternatives to credit cards and
PayPal. The responses suggesting bitcoin came pouring in.

Itbs easy to see why he asked in the first place. After successfully
launching Megaupload, Kim Dotcombs business enterprise was shut down by the
FBI and his funds frozen over alleged copyright infringement, money
laundering, and conspiracy. Also, PayPal has recently taken a stricter stance
on file-hosting services due to piracy concerns. Kim Dotcom is launching a
new online business, Megabox, in four to six months and he probably doesnbt
want to bother with the likes of PayPal.

However, there are two unique aspects of the bitcoin cryptocurrency for Kim
Dotcom to consider b an online payment method for customers and a reliable
storage facility for his companybs monetary assets.

On the first count, bitcoin could replace PayPal and credit cards which would
increase the transactional privacy of his many loyal customers as well as
dramatically reduce the processing fees that his company has undoubtedly been
forking over to PayPal and credit card processors. At its peak, Megaupload
served about 180 million users.

Now, since his extradition hearing has been delayed until 2013, Kim Dotcom
has made the extraordinary offer to go to the United States voluntarily if he
and his colleagues receive a fair trial and the unfreezing of his funds to
pay legal bills and pretrial living expenses. The U.S. Department of Justice
has already seized $67 million. With 22 lawyers working on the case in
different countries, Kim Dotcom tells the New Zealand Herald, bI have
accumulated millions of dollars in legal bills and I havenbt been able to pay
a single cent. They just want to hang me out to dry and wait until there is
no support left.b

This is where bitcoin, on the second count, would prove even more useful as
funds retained on the distributed bitcoin block chain cannot be seized in any
jurisdiction. As the holder of the private key, you and only you control
access and dispensation of the bitcoin value. A distribution mechanism could
be set up for Kim Dotcom to transfer a certain amount of bitcoin to a third
party that would handle the payment of his legal fees in various national
currencies. Or, his legal team could even accept bitcoin directly as payment
for legal services rendered. If he establishes a brainwallet, he could even
authorize the transfer from prison.

In a Skype interview with The Hollywood Reporter, Dotcom said, bMy home was
raided by 72 heavily armed police arriving in helicopters. This was an Osama
bin Laden-style operation on an alleged copyright infringer. I guess itbs
pure luck that my family wasnbt terminated by a Predator drone.b Dotcom also
believes that bdirty delay tactics instead of evidenceb are being deployed by
the U.S. Government and that bthe [delaying] actions clearly demonstrate that
they donbt have a case and that this b& was about killing Megaupload and
creating a chilling effect to freeze the whole file-hosting sector.b

Ruling on June 29th, U.S. District Court Judge Liam ObGrady ordered that
defendants could argue for a motion to dismiss the allegations against the
company but seized assets would not be unfrozen to pay attorney costs due to
the fact that defendants are currently challenging extradition abroad. After
this saga unfolds and given the sad and overzealous trend in pretrial asset
seizure, I expect many rainy day legal defense funds to be established in
bitcoin.

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