system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: The whole "Kim Dotcom"-Thing from the beginning till now.
gpt
Kim Dotcom owned a pirate site called megaupload. Pirate sites are those which derive income from sharing games and movies that they didn't make, and they don't have the right to distribute.  In Megaupload's case, this is by selling premium memberships to upload and download anything you want, as well as advertising revenue.

Megaupload also did a fair amount of legitimate business, hosting files that the users weren't in violation of copyright law.  They also complied with the letter of the law as far as respecting copyright laws are concerned.  This is why people on the internet are very angry Kim Dotcom getting prosecuted, his website wasn't much different from Youtube as far as copyrighted material is concerned.

He was targeted for two specific reasons:  The first is Megaupload was often especially blatant about its business model revolving around copyright violations.  The second was the FBI gained access to a number of internal E-mails and memos which implied Megaupload was violating copyright law *knowingly and intentionally,* as opposed to Youtube, Google, and a large number of other sites which are very careful to never admit (internally or externally) how much they benefit from violating copyrights.

Because Kim Dotcom was in New Zealand, and the US Authorities are only in the US, the US authorities attempted to work with the New Zealand Authorities to get Kim Arrested.  Because arresting someone across international lines is an extremely complicated legal procedure, and the authorities making the arrest didn't quite understand each others legal systems, *a lot* of mistakes were made during his arrest.

Furthermore, every criminal investigation makes mistakes, but there were even more than normal on this one.  Warrants for the collection of evidence and arrest were not properly filled out, the actual arrest was conducted in what was arguably an illegal manner, and there was an open question of whether or not New Zealand Authorities were even supposed to legally comply with US authorities. 

Kim Dotcom's lawyers pointed all of this out, and judges agreed with them.  As a result, huge amounts of evidence were thrown out, the criminal case collapsed, and Kim is entitled to sue the police department for violating his rights.