The US justice department has shut down one of the world's most popular file-sharing websites for allegedly violating piracy laws, as police arrested MegaUpload.com's co-founders and two other staff members in New Zealand.

Working with US authorities, police in the New Zealand's city of Auckland detained co-founders Kim Dotcom, also known as Kim Shmitz, and Mathias Ortmann, as well as the website's chief marketing officer, Finn Batato, after a raid on a luxury mansion.

Bram Van der Kolk, a Dutch national, was also arrested.

The four appeared in Auckland's North Shore District Court on Friday and made applications for bail, but Judge David McNaughton remanded them in custody until Monday.

Grant Wormald, New Zealand detective inspector, said that after about 70 police raided 10 properties connected to those arrested, they "seized in excess of $6mn worth of top end motor vehicles and over $10mn in cash from several New Zealand finance companies."

Wormald also said that Dotcom, a 37-year-old German national, has been held on "warrants relating to breach of copyright offences in the US, money laundering and racketeering".

Rick Shera, a property lawyer, said that was the first time New Zealand had taken action to extradite an overseas person to the US for internet copyright infringement.

Mega conspiracy

The group, dubbed by prosecutors as Mega Conspiracy, was accused of engaging in a scheme that cost copyright holders more than $500mn in lost revenue and of generating over $175m in proceeds from subscriptions and advertising, according to the indictment unsealed on Thursday.

US justice department officials said that the estimate of $500mn in economic harm to copyright holders was on the low end, and probably significantly more.

If convicted, the maximum penalties are 20 years in prison for conspiracy to commit racketeering and money laundering, five years for each count of copyright infringement and five years for conspiracy to commit copyright infringement.

Critics of the US Stop Online Piracy Act, or SOPA, and Protect IP Act, quickly showed their opposition to the shutdown of Megaupload.com, with hackers attacking the public websites of the US justice department, the world's largest music company Universal Music, and the two big trade groups that represent the music and film industries.

The film and music industries want the US congress to crack down on internet piracy and content theft.

But major internet companies such as Google and Facebook have complained that current drafts of the legislation would lead to censorship.

Many US celebrities such as Kim Kardashian and Alicia Keys have publicly voiced support for MegaUpload.com without getting paid to do so.

Pavan Duggal, an expert on cyber and e-commerce law in India's capital New Delhi, told Al Jazeera that the celebrities believed file-sharing websites were "absolutely necessary" to spread their content to the general public and support the free exchange of information.