Kim Dotcom served a blow at extradition hearing

Kim Dotcom, the heavily indebted Megaupload founder, has had his application to throw out his extradition hearing denied.

The announcement comes just over one month after beginning of the hearing in Auckland, where US officials are trying to have the serial internet entrepreneur and his co-accused – Mathias Ortmann, Fin Batato and Bram van der Kolk  – extradited back to the US.

The four are being investigated over alleged copyright violation through Dotcom’s file-sharing site Megaupload and charges of money laundering and conspiracy.

Dotcom aka Kim Schmitz had argued US officials gave him no time to put together a proper defense, neither did they give him access to his funds to pay expert witnesses. Dotcom did make around US$13m when he sold all of his shares in Megaupload’s follow-up Mega, but according to Torrentfreak, those funds were swiftly depleted “after various grabs by Hollywood on his funds and other living expenses.”

One of Dotcom’s major expenses was his experiment with New Zealand politics. According to public records published by the NZ Herald, his Internet party cost $NZ4.5 million.

A ruling was made yesterday by Judge Nevin Dawson, who said he would not hear Dotcom’s full argument to have the hearing thrown out.

Dotcom’s failed attempt to halt the hearing hasn’t come as a total surprise however, he had been seeking to the delay the hearing for some time but in early September the attempt had failed.

Next week, Dotcom’s legal team will begin his defense. He hopes to show that the New Zealand government broke the law when he was arrested four years ago.

Dotcom posted the following text on Twitter yesterday.

Dotcom has spent more than three years in a legal battle with US officials following a raid on his Coatesville mansion and his arrest in 2012. He faces allegations of conspiring to commit money laundering, racketeering, conspiring to commit copyright infringement and enabling online piracy.

To be extradited, the prosecution has to prove the charges may have been committed under both US and New Zealand law.

If extradited back to the US for prosecution, the violation carries decades of jail time. However, both parties have the option to appeal the decision following the hearing so any resolution to the legal battle could take years.

The accused are yet to be charged in New Zealand.

Meantime, Dotcom pitched his alternate internet model MegaNet to Sydney startup conference SydStart yesterday. Essentially, MegaNet won’t host any IP addresses; instead it will use a ledger system similar to that used for Bitcoin to exchange data and make hacking difficult.

Dotcom has said he has a team working on creating an encryption layer that will run through all digital communications tools. “We are going to use very long keys, systems that will not be reverse engineered or cracked by any supercomputer,” he said.

MegaNet will receive a beta launch in a year’s time with a seed funding round kicking off in January.