AUCKLAND, New Zealand—He's back. And this time he has encryption.

Kim Dotcom, the larger-than-life personality accused by the U.S. of operating a website used to pirate half a billion dollars in entertainment, introduced a new version of his controversial file-storage service on Sunday. Mega, as his new service is known, features a technology that won't necessarily shield the company or its users from liability in copyright infringements but might make it harder for copyright holders to identify illegal content.

Mr. Dotcom's Megaupload site was shut down a year ago by the U.S. Federal Bureau of Investigation during its largest-ever criminal copyright enforcement. The FBI alleged Megaupload was used to pirate entertainment content.

The launch of a similar site might antagonize the U.S., because the Justice Department has labored in court for a year to have the 39-year-old, originally from Germany, extradited to the U.S. to stand trial.

His case remains tied up as New Zealand courts consider whether the 2012 raids on his Auckland mansion to arrest him and seize assets and computer hard drives were legal and, if not, how this can be remedied. There is no clear timetable on when the case might end.