One of the essential questions that arose in the early years of the internet was whether sites should be held legally responsible for what people do or share on them. Napster was a pioneer in this fight, but the battle is ongoing, and a court in New Zealand just reinforced those who want stricter government prosecution of file-sharing sites, agreeing to the extradition of Kim Dotcom, founder of Megaupload, to a U.S. court.

Megaupload allowed users to upload files that could then be downloaded by others, and U.S. government officials contend that the site hosted millions of downloads of copyrighted materials over seven years, denying $500 million to those who made the the music, ebook, business software, television, or film.

It’s long been widely seen as illegal to knowingly download content without paying the rights-holders, but the question in this case is whether the government can go after the site that hosts the download itself. Legal jurisdiction and precedent become a little fuzzy in this case, because the leaders of a site may have only spurious knowledge of or ability to control exactly what kinds of things people are sharing, let alone determine whether that sharing is itself illegal.

The government may be trying to sidestep some of these issues by claiming that not all sites that host illegal content are necessarily illegal. It will, however, hold responsible those, like Megaupload, that actively promote such hosting. The charges against Dotcom cite Megaupload’s rewarding of popular content hosts, including those who hosted copyrighted content, as evidence the site’s founder was responsible for the massive volume of fraud.

The New Zealand court didn’t rule on whether Dotcom is guilty of all that the United States is accusing him of, but it did grant that the charges and evidence against him merited extradition. Dotcom, a 39-year-old German national born Kim Schmitz and now living in Aukland, faces accusations of money laundering and racketeering as well as copyright infringement. His defenders argue that the New Zealand court has been acting as a puppet of the United States, authorizing the seizure of much of his property before any court had convicted of a crime, and that any trial in the United States will be similarly biased.

Dotcom appears to be preparing for a final appeal to New Zealand’s highest court, but his prospects at this appear bleak. From his initial arrest in a paramilitary-style raid to the most recent ruling, government officials have proven deeply invested in his arrest and prosecution. At every step of the way they have achieved what they have wanted, and the self-described “internet freedom fighter” has lost. Though it should be noted, Dotcom also made out pretty well at Megaupload, raking in an estimated $200 million in cash from the site.

If sites like Megaupload and Napster constituted the Wild West of the internet, police are now laying down the law. They’re assuming their appropriate controls over digital space, and this case may go a way toward deciding whether these sites are legitimate domains of a sharing economy. A major criticism of the recent Trans-Pacific Partnership, which included both the United States and New Zealand, held that the trade deal would affirm the powers of law enforcement to track copyright materials overseas.

File sharing constituted an essential piece of early digital growth, and its demise could also spell an incredible boon to law enforcement agencies that want to prosecute hosts of copyright materials beyond their immediate reach. Megaupload was based in Hong Kong, but U.S. officials managed to seize its domain names and shut it down globally in 2012. Now they’re having no trouble picking its founder out of New Zealand to be shipped to a country he has never visited on the grounds that he is a fugitive.

For someone facing a lot of time in an American prison though, Dotcom seems remarkably unfazed. As of now, he’s still at home with his family, pursuing a lawsuit against Hong Kong officials for seizing the site and developing plans for a new, “untraceable” internet to be run through a network of cell phones around the world. Like a high-tech Don Quixote, Dotcom will keep fighting for what he believes is right, even if there is no way the world is going to let him win.