Mega denies claims by Kim Dotcom of NZ government control of company

Encrypted cloud storage service Mega has hit back at claims by Kim Dotcom that it is in the hands of a wanted Chinese investor whose shares have been seized by the New Zealand government.
Written by Chris Duckett, Contributor

Mega has labelled as defamatory comments made by Kim Dotcom in an interview on Slashdot, where he stated that the company has fallen victim to a hostile takeover.

According to Dotcom, the company is in the hands of a Chinese investor who is wanted for fraud in China, and has consequently had his shares seized by the New Zealand government, putting it in effective control of the company.

"As a result of this and a number of other confidential issues, I don't trust Mega anymore," Dotcom said. "I don't think your data is safe on Mega anymore."

In response, Mega said that it has 13 percent of its shareholdings subject to two freezing orders. A 6 percent holding controlled by Dotcom's estranged wife was frozen in November 2014 by the New Zealand High Court on application by five Hollywood film studios, and, in a separate matter, a 7 percent shareholding was frozen by the High Court in August 2014.

In both instances, Mega said the orders were for the shareholders, and do not concern the company.

"Mega is not a party to either of the above court proceedings," it said.

"More than 75 percent of shareholders have supported recent equity issues, so there has not been any 'hostile takeover', contrary to Mr Dotcom's assertion. Those shareholders who have decided not to subscribe to recent issues have been diluted accordingly. That has been their choice."

The company also said that Dotcom has not been a director at Mega since October 2013, and that it disagrees with a number of his public statements.

Dotcom has been embroiled in a legal and political saga in New Zealand since he was arrested and his home was raided in early 2012 due to his activities and involvement with founding Megaupload. He continues to face extradition to the United States on copyright infringement and racketeering charges.

A year later, Dotcom launched Mega, an encrypted cloud storage service that attempted to position itself a privacy-orientated product.

In May, Mega attempted to execute a reverse takeover to be listed on the New Zealand Stock Exchange, but failed to gain shareholder approval in the intended shell company, TRS.

Overnight, Dotcom said he would be able to create a competing service next year.

"My non-compete clause is running out at the end of the year, and I will create a Mega competitor that is completely open source and non-profit, similar to the Wikipedia model," he said. "I want to give everyone free, unlimited, and encrypted cloud storage with the help of donations from the community to keep things going."

Mega said it viewed Dotcom's comments as an attempt to drum up interest in the upcoming business.

"They are inconsistent with his previous desire to ensure that the shareholding in Mega remains a valuable asset for his children and reflect just how completely Mr Dotcom and Mega have now moved apart if he can make such an unwarranted and irresponsible, defamatory attack," the company said in a statement.

The New Zealand government apologised to Dotcom in 2012 for illegally spying on him.

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