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Megaupload, one of the internet's largest file-sharing sites, has been shut down by officials in the US.

The site's founders have been charged with violating piracy laws.

Federal prosecutors have accused it of costing copyright holders more than $500m (£320m) in lost revenue. The firm says it was diligent in responding to complaints about pirated material.

The news came a day after anti-piracy law protests, but investigators said they were ordered two weeks ago.

The US Justice Department said that Megaupload's two co-founders Kim Dotcom, formerly known as Kim Schmitz, and Mathias Ortmann were arrested in Auckland, New Zealand along with two other employees of the business at the request of US officials. It added that three other defendants were still at large.

"This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime," said a statement posted on its website.

In response, hackers targeted the US Department of Justice and FBI websites.

The FBI website is intermittently unavailable due to what officials said was being "treated as a malicious act".

The hackers' group Anonymous said it was carrying out the attacks.
Third-party sites

The charges included copyright infringement, conspiracies to commit racketeering, copyright infringement and money laundering.

A federal court in Virginia ordered that 18 domain names associated with the Hong Kong-based firm be seized.

The Justice Department said that more than 20 search warrants had been executed in nine countries, and that approximately $50m in assets had been seized.

It claimed that the accused had pursued a business model designed to promote the uploading of copyrighted works.

"The conspirators allegedly paid users whom they specifically knew uploaded infringing content and publicised their links to users throughout the world," a statement said.

"By actively supporting the use of third-party linking sites to publicise infringing content, the conspirators did not need to publicise such content on the Megaupload site.

"Instead, the indictment alleges that the conspirators manipulated the perception of content available on their servers by not providing a public search function on the Megaupload site and by not including popular infringing content on the publicly available lists of top content downloaded by its users."

Before it was shut down the site posted a statement saying the allegations against it were "grotesquely overblown".

"The fact is that the vast majority of Mega's internet traffic is legitimate, and we are here to stay," it added.

"If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch."
Blackouts

The announcement came a day after thousands of websites took part in a "blackout" to protest against the Stop Online Piracy Act (Sopa) and the Protect Intellectual Property Act (Pipa).

The US Chamber of Commerce has defended the proposed laws saying that enforcement agencies "lack the tools" to effectively apply existing intellectual property laws to the digital world.

Industry watchers suggest this latest move may feed into the wider debate.

"Neither of the bills are close to being passed - they need further revision. But it appears that officials are able to use existing tools to go after a business alleged to be inducing piracy," said Gartner's media distribution expert Mike McGuire.

"It begs the question that if you can find and arrest people who are suspected to be involved in piracy using existing laws, then why introduce further regulations which are US-only and potentially damaging."

According to the FBI, over 1.5 million background checks on customers were requested by gun dealers to the National Instant Criminal Background Check System in December. Nearly 500,000 of those were in the six days before Christmas.

It was the highest number ever in a single month, surpassing the previous record set in November.

On Dec 23 alone there were 102,222 background checks, making it the second busiest single day for buying guns in history.

The actual number of guns bought may have been even higher if individual customers took home more than one each.

Explanations for America's surge in gun buying include that it is a response to the stalled economy with people fearing crime waves. Another theory is that buyers are rushing to gun shops because they believe tighter firearms laws will be introduced in the future.

The National Rifle Association said people were concerned about self defence because police officer numbers were declining.

A spokesman said: "I think there's an increased realisation that when something bad occurs it's going to be between them and the criminal."

But anti-gun campaigners said those who already owned weapons were simply hoarding more of them due to "fear-mongering" by the NRA.

A spokeswoman for the Brady Campaign to Prevent Gun Violence said: "The research we've seen indicates fewer and fewer people are owning more and more guns."

Dave LaRue, of Legendary Guns in Phoenix, Arizona, said Christmas sales were up 25 per cent on the previous year and ammunition sales were also "brisk".

He said: "There are a lot of people concerned about pending gun legislation and the sense about the current administration. People think future availability will be limited and there's a feeling of get it while you can."

The record for gun sales in a single day was set in November, on the day after Thanksgiving, when 129,166 background searches were carried out on customers buying weapons.

Since the near-fatal shooting of congresswoman Gabrielle Giffords by a deranged gunman in Tucson, Arizona last January there have been increasing calls for tighter gun control. Miss Giffords survived being shot in the head with a semi-automatic handgun, and six other people were killed.

(Reuters) - A contrite Jon Corzine, in his first public defense of his leadership of now-bankrupt futures brokerage MF Global, told U.S. lawmakers he "never intended" to break rules and had no clue what happened to hundreds of millions of dollars in missing customer money.

The former U.S. senator and Goldman Sachs chief executive freely answered lawmakers' questions during a fairly friendly House Agriculture Committee on Thursday.

But he tried to duck responsibility by repeatedly claiming a lack of intent and lack of recollection about key events that led to the firm's downfall and its scrambled books.

Legal experts said it was a clear tactic to try to avoid criminal charges.

"I never intended to break any rules, whether it dealt with the segregation rules or any of the other rules that are applicable," said Corzine, wearing a somber dark suit and armed with an accordion file folder of documents and a highlighter pen.

Thursday's hearing was a stunning reversal for a political and financial power broker who endured three hours of pointed questions behind a placard that bore the title "Honorable" in front of his name. Corzine had once been the lawmaker who made witnesses squirm.

The testimony came six weeks after MF Global collapsed into bankruptcy once the market lost confidence in the firm following a revelation it had made a $6.3 billion bet on European sovereign debt.

The search for hundreds of millions of dollars in missing customer funds has sent reverberations through the farm belt and trading floors, and has attracted the attention of the FBI and federal prosecutors.

When pressed by lawmakers about whether he authorized a transfer of customer funds to firm accounts - a major violation of industry rules - Corzine said: "If I did, it was a misunderstanding."

Michael Weinstein, a white-collar lawyer with Cole Schotz law firm in New Jersey, said Corzine's persistent claim of lack of intent "was essentially code for 'Prosecutor, you bring these charges, you are going to have a hard time proving intent, and that's what you need to convict me'."

Neither MF Global nor any of its executives has been charged with wrongdoing.

Lawmakers thanked Corzine for not invoking his right to avoid self-incrimination under the Fifth Amendment of the U.S. Constitution. But he was criticized for not giving a straight answer on whether he directed the transfer of customer funds to firm accounts.

"Throughout this hearing I can count the times you used the words 'never intend,' 'not to my knowledge,' 'not to my recollection,' 'never intended to.' And I understand the position that you're in, but Mr. Corzine, we've got to find that money," said Democratic Representative David Scott.

THE 'PLIGHT' OF FARMERS

Corzine apologized for the collapse of the firm, and said his "sadness" pales in comparison to MF Global's customers, employees and investors.

Thousands of customers, including many farmers who use futures to hedge risks, have had their money frozen.

"Their plight weighs on my mind every day - every hour," Corzine told the panel after being sworn in by committee Chairman Frank Lucas.

Corzine said, "My father was one of those folks who'd go to a grain elevator to hedge out future crops."

The hearing stretched over eight and a half hours, and was the first to bring together a full cast of characters, including Corzine, regulators and the legal counsel for the trustee liquidating MF Global.

In its strongest accusation yet against the firm, CME Group Inc, MF Global's on-the-ground regulator, said the firm misused hundreds of millions of dollars of customer funds by moving the money to its own accounts.

"Transfers of customer funds for the benefit of the firm constitute serious violations of our rules and of the Commodity Exchange Act," CME Executive Chairman Terrence Duffy said.

The court-appointed trustee has estimated the shortfall of customer money at $1.2 billion, but CME has disputed that figure as being too high. In his prepared testimony, Duffy indicated the shortfall was roughly half that amount.

Corzine was flanked by his bow-tied lawyer, Andrew Levander, and said he was aware that he had the right to counsel. He pleaded ignorance on how customer money might have made its way into the firm's own coffers.

"I simply do not know where the money is, or why the accounts have not been reconciled to date," he said.

Lawmakers asked Corzine to lay out how he may have "unintentionally" contributed to the mixing of customer and firm money. He pointed to the chaos of the hours leading up to MF Global's bankruptcy filing on October 31.

"Someone could misinterpret 'You gotta fix it,' which I said the evening of October 30th,'" Corzine said.

'DIFFERENT JUDGMENTS'

Corzine defended his time at the top of the firm, which he joined in March 2010, saying MF Global reduced leverage during his tenure. He said he accepts responsibility for the repo-to-maturity trades that related to the firm's $6.3 billion bet on European sovereign debt.

"At the time that MF Global entered into the transactions, I believed that its investments in short-term European debt securities were prudent," he said.

Corzine said there was some dissent within MF Global about the European debt strategy but that "generally we arrived at a consensus."

He tried to drive home that the European debt bets have held up and said the market confidence crisis had more to do with MF Global executives' "inability" to explain that the firm's losses were not tied to the sovereign debt exposure.

"Your answers sound so nice, but you riskily invested people's money without their knowledge in a market I wouldn't invest in," said Republican Representative Jean Schmidt.

Corzine conceded the business strategy he championed may have been flawed.

"Sitting here today, with the knowledge that the market has drawn the conclusion it has drawn, and the facts are what they are, it would have been better to have taken different judgments," he said.

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