Megaupload has strengthened its demand to have the criminal indictment against the company thrown out by the court, thus ending the case. The United States Government told the court last week that it fears the end of the Megaupload prosecution if the judge makes the 'wrong' decision, and these words are now being used against it. In a new brief submitted to the Virginia District Court, Megaupload's lawyers argue that the Government admits that it may not have a case.

Earlier this week Megaupload’s lawyers released a white paper accusing the Obama administration of being corrupted by Hollywood and other major corporations, and detailing how the entire criminal case against Megaupload is baseless.

In addition to this public attack, Megaupload’s legal team is also building up pressure in court.

In a new brief they argue that the case against the company should be thrown out, since the Government has more or less admitted that there is no legal basis to keep the company in criminal limbo.

The two parties have a standoff about “Rule 4” of criminal procedure, which requires the authorities to serve a company at an address in the United States. According to Megaupload this is impossible since the company is based in Hong Kong. The U.S. Government disagreed and said that it could find a way to serve the company, but this is yet to happen.

What followed was a back and forth exchange, with Megaupload requesting an end to the case and the U.S. arguing against it. In an unexpected move last week, the Government stressed the importance of the pending decision by pointing out that the wrong choice could put an end to the case.

In a brief filed yesterday evening, Megaupload’s lawyers respond to these claims by pointing out that without a dismissal “Megaupload will be indefinitely stuck in criminal limbo.”

This would mean that the company’s rights will continue to be violated by the current stalemate.

“As a result, Megaupload is trapped in a state of criminal limbo, where it is subjected to daily, irreparable harm from criminal indictment and the seizure of its assets, while being denied the benefits of the adversarial process and protections,” the lawyers write.

According to Megaupload’s legal team the Government appears to be contradicting itself. The lawyers note that the Government first argued that Megaupload can be served when Kim Dotcom and the other defendants are extradited from New Zealand, but that it now appears to be backing away from this stance.

“The Government has now changed its tune, claiming that because of delays in the extradition process, ‘it is likely that any ‘temporary’ dismissal would be permanent and contrary to the interests of justice’,” the lawyers write.

“The Government thus seems to confirm what this Court has already observed—namely, ‘that the individual defendants may never be extradited’ and criminal proceedings may therefore never commence. Given this reality, due process demands that the Superseding Indictment be dismissed.”

The recent briefs from the U.S. Government and Megaupload show that District Court Judge Liam O’Grady’s decision will be a pivotal one.