The U.S. Government has just submitted its objections to Megaupload's motion to temporarily dismiss the criminal indictment against the company. Megaupload's lawyers had argued that a dismissal would allow the cyberlocker to rehabilitate itself, but the U.S. believes this can't happen as Dotcom has sworn that the old Megaupload won't return. According to Kim Dotcom the DoJ's opposition is "full of frustration." "Their bluff case is falling apart," he says.

Two weeks ago Megaupload filed a renewed request to dismiss the indictment against it, until the U.S. Government finds a way to properly serve the company.

Megaupload’s legal team reiterated that the company’s due process is at stake. The company has already been destroyed and is being held ransom by the U.S. Government, without any funds to establish a proper defense.

“The company should have an opportunity during that period of time to try to rehabilitate itself,” is one of the claims made.

In a filing submitted to the District Court yesterday the Department of Justice (DoJ) opposes the motion. Among other things, the DoJ argues that Megaupload has not “suffered massive harm” as New Zealand’s court records show that Dotcom doesn’t intent to bring the site back online.

While Megaupload’s legal team never said the company would bring Megaupload back online, this is what the DoJ appears to conclude from the attorney’s earlier statements.

In their opposition filing the DoJ cites several sworn statements made by Kim Dotcom in New Zealand, where he states that Megaupload won’t return while he is out on bail. This contradicts the “rehabilitation” argument, the DoJ concludes.

“Defense Counsel’s claim that the corporate defendant can and should be allowed to operate undermines the sworn statements of Dotcom that he has no plans or ability to continue to operate or fund the businesses in the Indictment during pendency of the extradition process,” the DoJ writes.

“If defendant Dotcom intentionally misled the court in New Zealand about his intentions and capabilities in order to obtain his release from pre-extradition confinement, it seems Defense Counsel’s representation might endanger Dotcom’s bail situation or even subject him to additional charges.”

The DoJ argues that “rehabilitation” implies the ability to relaunch the site while the extradition process in New Zealand is still ongoing, meaning that Dotcom would have misled the court.

In other words, since Megaupload can’t return pending the extradition procedings, there is no harm done or due process violated by not dismissing the indictment.

Dotcom himself is not impressed by this line of reasoning, describing it as a bluff that’s borne out of frustration.

“Just saw the opposition by the DOJ against our new motion to dismiss. It’s full of frustration. Their bluff case is falling apart. Good!!!” Dotcom notes in a tweet.

“If the DOJ was a poker player they wouldn’t survive a single bluff. Their tells are so easy to read,” he adds. “All-in.”

Bluff?

To most observers the above may be a little confusing. After all, Kim Dotcom has said on numerous occasions that Mega will return. However, Mega is not the same as the old Megaupload.

In poker terms the new Mega is playing a new game at a different table.

Dotcom and his colleagues are currently working on a brand new service that will be bigger and better than the file-hosting service that was taken down. Mega will have a strong focus on security and privacy of users’ files, and is set to offer more services than file-sharing alone.

This means that the DoJ is probably right by arguing that Megaupload will not return. However, that does not mean that the funds that will become available, when the indictment is dropped, can’t be used to rehabilitate the Megaupload brand in other ways.

Update: Megaupload attorney Ira Rothken tells TorrentFreak that the DoJ’s opposition is misleading. What the company wants is to provide users an chance to get their files restored, and to free up funds for Megaupload’s defense. As the DoJ is blocking both options Megaupload sees no other way than to ask for a temporary dismissal.

“The DOJ refuses to unfreeze assets so Megaupload can provide consumer access to legacy files. The DOJ then tries to deflect their anti-consumer behavior by concocting an argument that use of the term “rehabilitation” is bad when any rehabilitation of Megaupload would likely have to be blessed by two Federal Judges after a robust meet and confer process with stakeholders,” Rothken says.

“Megaupload is interested in getting consumers access to their files and the DOJ is taking an anti-consumer view by preventing such access.”

“Since early this year Megaupload has offered to the DOJ to make an appearance in the United States with a plea of not guilty, to waive arguments regarding defective service of process on a foreign corporation, and to go to trial in the US if the DOJ would agree to free up Megaupload’s own funds so Megaupload can afford to turn back on consumer access in an agreeable manner and to pay fair legal defense fees – the DOJ refused.” Rothken adds.

“Megaupload was left with no choice but to bring a motion to dismiss which if successful would be an alternative method of freeing up Megaupload’s funds to provide consumer access, to pay legal and e-discovery vendor fees, and to rehabilitate the cloud storage site’s relationship with its customers.”

“Turning on Megaupload legacy consumer access is not as easy as flipping a switch instead it would require a detailed plan on preserving electronic evidence and an agreement on “safe harbors” for bandwidth, intermediaries, and host providers that would be blessed by a Federal Judge.”

“The DOJ in our view is misleading the Court on the Megaupload rehabilitation issue. The DOJ knows the Megaupload domain, assets, and servers are locked down in Virginia and they understand that any “rehabilitation” of the legacy cloud storage site for consumer access would be something that would be done through the “meet and confer” process Judge O’Grady previously ordered involving Judge Anderson.”

“Therefore any “Rehabilitation” of the Megaupload legacy cloud would likely get prior approval by two Judges and would pass muster as a matter of law.”