As such they're pulling down anything and everything that might be even possibly illegal.

This law wouldn't be in effect for them?

http://copyrightblog.kluweriplaw.com/2015/02/11/cjeu-mere-ac...

https://www.plagiarismtoday.com/2015/12/28/extradition-juris...

In short, much of Megaupload’s servers were located in the U.S. This, for the purpose of jurisdiction, means two things. First, much of the alleged crimes took place physically in the United States. The infringements, the payments, etc. took place, at least in large part, in Virginia even if the people orchestrating it were scattered all over the world.

More importantly though, courts in both the U.S. and now New Zealand have ruled that these servers provide sufficient contact with the U.S. to give it jurisdiction over the criminal case. While jurisdiction alone doesn’t mean a person can be extradited, it’s a crucial step and this also explains why a man who never set foot in the U.S. can be extradited to it for a crime committed online.

However, this isn’t the first time the U.S. has used the server argument it’s been using it for years to combat securities fraud in the country.

This logic is twisted and does not follow at all, except if you have a purely old world way of thinking (i.e. pre-internet), or are morally flexible when it suits your narrative.

The lesson is clear though, stay away from American servers.

Which law is this and when did it go into effect?

Store encrypted chunks strewn across multiple nodes, so that each node can reliably deny knowledge, or even possession of a full copy, of the content. So they can't be sued.

This, of course, prevents making this content from being accessible to public.