US government demands money from Megaupload users -

The US government, which possibly illegally seized the data of millions of Megaupload customers, is now demanding that they pay to get it back.

US federal prosecutors say that they are fine with Megaupload users recovering their data as long as they pay for it.

According to a recent court filing, prosecutors have responded to an Electronic Frontier Foundation request in late March on behalf of Kyle Goodwin. Goodwin used Megaupload legitimately for storing videos.

US law allows for third parties who have an interest in forfeited property to make a claim. But the government argues that it only copied part of the Megaupload data and the physical servers were never taken.

Megaupload's 1,103 servers are held by Carpathia Hosting, the government said.

But the government said that identifying, copying, and returning Goodwin's data will be expensive, and Goodwin wants the government, or Megaupload, or Carpathia, or anyone other than himself, to bear the cost.

So what the government is saying is that while it is wrong for Megaupload to make money storing user data, it is ok for either it or Carpathia to do so.  While Kim Dotcom can be arrested for selling data storage to people, the US government can seize that data and sell it back to its victims at a high cost. 

What appears to be happening is that while the case against Megaupload is starting to unravel on procedural problems, the US government seems to want to continue to punish the company's users, who will suffer even if Megaupload is never convicted.