MegaUpload operated with foreknowledge of extensive infringing activity on their site, and further willfuly acted to further that activity, for instance by creating an affiliate program that rewarded site members for pushing more copyrighted material to the site.

I think in some of your responses you are mistaking a condemnation of the US law enforcement approach with a defense of MegaUpload's practices.

Let's say that investor G, a citizen of country U, owns part of a website S that profits by republishing PDF files without explicit permission of the rights' holders. Let's posit that somewhere there exists email showing that G knows that some of these files not always legal.

G also operates another website Y that allows members to submit links to content. G encourages frequent submitters by establishing a point system to reward submissions with increased status within the community. Graham then adds code to his website that automatically resubmits some of these links to S, causing it to be (on occasion) illegally hosted.

The government of a small Southern Hemisphere Z is then lobbied by it's constituent corporations to take action to prevent this crime, which is without doubt clearly probably illegal under Z's laws, and almost as certainly illegal in U. Would country U be justified in seizing G's assets, shutting down his companies, and imprisoning him while while Z is preparing it's case against him?

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Personally, I don't really fault the US government for acting as it did. It took action that benefited its benefactors. You've got power, you use it. It's also hard to fault New Zealand, as it was probably offered as a "bargain you can't refuse". I don't dispute that Megaupload was only a viable company to the extent that it engaged in currently illegal activity, although I don't think this is different than the way many other now legitimate companies got started.[x]

But I certainly hold to task anyone who argues that the behaviour of the US goverment was legal, moral, or tolerable. I find it no more defensible than assassinating him with an unmanned drone operating within a sovereign country. At least if they'd done that they might have fewer defenders.

[x] Such as Google. In addition to my example here, and well before Youtube came into the picture, I'd suggest that from the beginning Google was based on what at the time was "clearly" illegal behaviour to many.

Scanning the web to index all the content one can reach, ignoring the clearly stated Terms of Service printed on these pages? Storing the full text on their own servers? Serving excerpts to users? Serving complete copies of these pages? All of this was in doubt, and I'm glad that no foreign superpower with an entrenched interest stepped in to quash it before it could develop further.

My belief is that there is no clear legal difference between Megaupload and many other sites on the internet, just differences in selective enforcement. Text search is fully legal, image search is largely tolerated but still formally debated (see recent German supreme court decision), and music and video remain the Wild West. It's not that there is no law, but the law as enforced not necessarily consistent with the law on the books. There is a moral and ethical landgrab going on, and I'd bet that some online activities that are "clearly illegal" today will be fully accepted as legal in only a few years.