Kim Dotcom is offering a bounty of €10,000 (approx. US$13,580) to the first person who breaks its newly launched file storage service. The New Zealand-based German’s new security system is installed at Mega.

Kim Dotcom

After being criticized for the inept handling of security, Kim Dotcom announced a prize to the hackers last week.  Negating the points raised by Ars Technica and Forbes, a blog post from Mega said the site will be restored with new updates to boost the privacy of data, including a change password feature and more.

Less than two weeks old, Mega passed 1 million registered users after just one day online, and is storing nearly 50 million files.

A tweet from Kim Dotcom read:

Kim Dotcom @KimDotcom

#Mega‘s open source encryption remains unbroken! We’ll offer 10,000 EURO to anyone who can break it. Expect a blog post today.

2:43 AM – 01 Feb 13

The service offered has been criticized about file sharing this week. Dotcom earlier reported that the site would be “powered by legality and protected by the law”. The company revealed that about 20 lawyers have advised them on copyright violation.

On Thursday, Kim Dotcom claimed that only 0.001 percent of the Mega files contradict copyright laws. However, there is evidence,  negating this claim from Dotcom.

The company earlier blocked public search engines from accessing the publicly available files of Mega users. Mega-Search.em was the first to convert Mega into a publicly downloadable site.

As per Torrent Freak, Mega has been unnecessarily policing content. In a move suggesting that Mega is either blocking third-party uploads or keenly monitoring content uploads, numerous legal videos posted to the service via Mega-Search were immediately taken down for copyright issues. This is in sharp contrast to Kim Dotcom’s claim that generally only 50 Mega-hosted files are taken down per day.

The prize offered is part of an improvement of the feature, while it is still in beta phase “You find a bug. We fix it,” Dotcom said last week. Such monetary incentives are offered by various major tech firms, though in a less hyped way. Big firms like Facebook Inc (NASDAQ:FB), Google Inc (NASDAQ:GOOG), Dropbox and others have been offering rewards to developers to find bugs.