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Director Uses Takedowns to Remove Pirate Bay Docu "TPB-AFK" from YouTube.
(torrentfreak.com)
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Is the question how does it work legally or technically?
There's nothing inherently illegal about the service or how it works which is why it isn’t outright banned. The illegal part is sharing copyrighted material over the service and I think you could get caught doing this just like someone using regular torrents without a VPN would be.
Legally - if the content is legal to share in the jurisdiction it’s being streamed