Between continuing accusations of enabling music piracy and the legal troubles of its young CEO Pavel Durov  [GV], Russian Facebook clone VKontakte  has recently seen more than its fair share of trouble from the Russian government. The most recent batch, however, comes courtesy of the Ukrainians.
On June 26, 2013 Nikolai Durov, Pavel's older brother and VKontakte co-founder, reported [ru] that Ukrainian authorities have seized VKontakte's Ukrainian-based servers. Because VKontakte is popular with Russian speaking Ukrainians, the network keeps “caching” servers in Kiev in order to facilitate speedy access to music and video files for Ukrainian users. It was these servers that were confiscated by local police, which Pavel Durov claims led to a service slow down  [ru]:
В результате видео- и аудиоконтент у украинских пользователей грузится медленнее, так как все данные доставляются напрямую из Петербурга.
As a result, the video and audio content loads slower for Ukrainian users, since all the data are being delivered straight from St. Petersburg.
The Ukrainians were apparently investigating tax evasion on the part of an unrelated company, whose financial documents they say could have been located on the servers. N. Durov bitterly wrote [ru] that this was simply a pretext:
Иначе говоря, доблестные украинские полицаи изъяли наши сервера без каких-либо законных оснований, а теперь, наверное, будут вымогать деньги (или тонну сала?) за возврат нам нашего же оборудования, а если не получится — продадут его налево.
In other words, brave Ukranian polizei removed our servers without any legal basis, and now they will probably extort money (or a tonne of salted pork fat?) from us for the return of our own equipment, and if that doesn't work they will sell it.
According to Pavel Durov, if the Ukrainian police were to actually sell the servers they would get a pretty penny — in his post on the subject he noted that the equipment costs around half a million dollars  [ru]. Later, Nikolai Durov broke that number down  [ru], explaining that VKontakte uses expensive servers that are filled with solid state drives, and cost around $25,000 each.
Ukrainian authorities claimed [ru] that they were not aware that the equipment they confiscated belongs to VKontakte — they were merely targeting the firm that provides space  [ru] for the servers. Nikolai Durov begged to differ  [ru]:
Насколько мне известно, забрали в точности наши сервера. По всей видимости, заказ был именно на них.
As far as I know they took precisely our servers. Apparently the hit was taken out for them specifically.
N. Durov did not say what the reason for this was, but he guessed [ru] that there is either a monetary motive, or the whole debacle is part of some competition between Ukrainian internal security forces. A few days later, on July 1, N. Durov published an update of the situation, saying that the Ukrainian police are still in possession of the servers, and are looking through them in order to find something that'll stick, or maybe even set VKontakte up:
Ясно, что при желании можно найти на дисках что угодно — например, предварительно списав туда свою коллекцию детской порнографии. […] Наверняка через неделю-другую появится пресс-релиз доблестных украинских полицаев, “раскрывших” преступление века, и обнаруживших на наших серверах всё что им угодно — хоть переговоры Саддама Хуссейна с Бен Ладеном.
Clearly, if there is a will there is a way of finding anything you want on the disks — for instance, by recording your child pornography there first. […] In a week or two, for sure, there will be a press-release by the brave Ukrainian polizei, who have “solved” the crime of the century and found all they wanted on our servers — up to and including talks between Saddam Hussein and Bin Laden.
In the meantime, VKontakte is working on housing its new servers in Germany.