Kim Dotcom wins bail

Megaupload founder Kim Dotcom returns to court.

The alleged internet pirate has been in custody since his arrest in a military style raid last month carried out by New Zealand police acting on a U.S. warrant.

But on Wednesday an Auckland court granted him bail, freeing him from jail but effectively placing him under house arrest and banning him from using the internet.

The verdict was a blow to U.S. crime fighters who had wanted to keep Dotcom behind bars.

The 38 year old German - who has New Zealand residency - said he was looking forward to being back with his family.

(SOUNDBITE) (English) KIM DOTCOM:

"I'm relieved to go home and see my three little kids and my pregnant wife."

Prosecutors say Dotcom was the ringleader of a group that netted 175 million US dollars since 2005 by copying and distributing music and movies without authorisation through website megaupload.com.

Dotcom's lawyers though say the company simply offered online storage and strenuously denies the U.S. charges.

Simon Hanna, Reuters. .