Much like Napster, his only real crime was success. If nobody or barely anyone used Megaupload, he wouldn’t have been in as much trouble. He paved the way for streaming and digital distribution of media. Megavideo in particular had the highest encoding rates possible at the time, even superior to YouTube.
YouTube is way more successful than Megaupload or Napster. The difference is that YouTube went above and beyond to comply with the law and Megaupload and Napster didn't.
YouTube had virtually zero enforcement. You could upload whole shows and movies and they were never taken down.
Other sites like Google Video or Vimeo did go above and beyond to comply and they lost badly.
YouTube started getting heat at some point and that’s only when they started enforcing, but by then, they already won.