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“Without access to materials relevant to the extradition hearing phase, the person sought will be significantly constrained in his or her ability to participate in the hearing,” Justice Helen Winkelmann said in a written judgment.

She said that would give the United States a significant advantage over Dotcom at next March’s extradition hearing.

Winkelmann also ruled that the legal document asking for Dotcom’s extradition did not comply with the law.

The judge said the extradition court hearing would be more modest than a formal criminal trial, but the evidence needed to be tested and the defense able to present its own evidence, test the prosecution’s claims and to examine witnesses.

The New Zealand courts have already ruled that evidence gathered in the January raid and sent to the United States was seized illegally and should be returned to New Zealand.

Dotcom, also known as Kim Schmitz, has always maintained that Megaupload simply offered online storage.

Separately on Thursday, Dotcom asked another court to free up cash so he can pay multi-million dollar legal bills.

Dotcom’s lawyers applied to use NZ$10-million ($8.1-million) of New Zealand government bonds he held so he can pay his lawyers’ fees, which have already cost NZ$2.7-million.

The internet entrepreneur’s bank accounts were frozen, and his assets, including works of art and 15 cars, seized in the raid.

His lawyers said the legal work done for Dotcom had been “mammoth” with more than 80 filings related to his bid for bail, access to funds, and challenges to search and seizure, and his legal costs could end up double what had already been spent.

They asked for Dotcom to be allowed some of his car collection, which includes a pink 1959 Cadillac convertible and 1957 Cadillac El Dorado, to raise funds.

© Thomson Reuters 2012