One of the world's most popular file-sharing sites has been shut down, with its founder and employees accused of facilitating millions of illegal downloads.

A US indictment accused Megaupload.com of costing copyright holders at least $US500 million ($A481.30 million) in lost revenue.

Kim Dotcom founder of megaupload and three other employees were arrested in New Zealand on Thursday at the request of US officials. The four, two of whom are New Zealand residents, are among seven people facing online piracy charges in the US.

Megaupload chief marketing officer Finn Batato, chief technical officer and co-founder Mathias Ortmann and Bram van der Kolk was also arrested.

The men face copyright infringement charges in the US which carry sentences of up to 20 years.

More than 20 search warrants were executed in the US and eight other countries on Friday.

$NZ50 million ($A38.83 million) were seized as well as 18 domain names associated with Megaupload.

Megaupload was unique because of its enormous size and the volume of downloaded content, also because it had high-profile support from celebrities, musicians and other content producers who are most often the victims of copyright infringement and piracy.

Megaupload was estimated at one point to be the 13th most frequently visited website on the internet.