He says the offers included one which was conditional on him leaving New Zealand, where he has been a thorn in the side of the government since he and three colleagues were arrested at the request of the FBI in January 2012.
The claim first emerged in a Q&A session on the Slashdot website over the weekend.
He responded to a question about the case saying the United States knew the case against him was "toxic" and that he wasn't "a criminal copyright infringer" saying there were efforts to cut a deal through Mr Heron, the New Zealand government's chief lawyer.
"The solicitor general of New Zealand had proposed that this case could go away If I was willing to accept some copyright liability under New Zealand law.
No extradition required," he told Slashdot.
The Herald asked Dotcom to expand - and he did.
By email, Dotcom said there were "several settlement negotiations" which were initiated by Crown Law with his former legal team, led by Paul Davison QC.
"The proposal was that I accept some copyright liability under New Zealand law. That would make the extradition process unnecessary.
"I would end up with a conviction in New Zealand. As a result both the NZ & US government would NOT be liable for damages because of the destruction of Megaupload."
Dotcom, who has always maintained he is not guilty, said he refused to cut a deal.
He then went on to form the Internet Party, form a partnership with the Mana Party and stand candidates in the 2014 election.
Dotcom organised the "Moment of Truth" event five days out from Election Day, hosting NSA whistleblower Edward Snowden and Wikileaks founder Julian Assange, alongside journalist Glenn Greenwald.
Claims made at the meeting turned the last week of the campaign saw Prime Minister John Key having to deal with claims over mass surveillance.
Dotcom said his former legal team was approached two days after the election and "asked if I was willing to leave New Zealand for good if my case was resolved".
"Heron said the Attorney General (Chris Finlayson) has instructed him to find a solution."
Dotcom said his legal team withdrew shortly afterwards over a lack of funding to keep fighting the case. The withdrawal was followed by Crown Law unsuccessfully attempting to have Dotcom sent back to jail with claims over his bail conditions.
He said he would win the case eventually because "I have done nothing wrong". "Many legal experts have questioned the legal basis for this novel case against me and Megaupload."
Dotcom said there was one way to settle the case - drop the charges, say sorry, return seized data to Megaupload users and then pay damages.
"I'm happy to travel to the US after that and help copyright holders to better monetise their content in the Internet age."
A spokeswoman for Mr Finlayson said: "The Attorney-General does not comment on the contents of without prejudice discussions that may or may not have occurred in the course of any litigation."
A spokeswoman for Crown Law said Dotcom's statements to Slashdot were "incorrect".
"We do not discuss the content of without prejudice discussions."
An extradition hearing to decide whether Dotcom and the three others charged with him will be sent to the US for trial is scheduled to go ahead towards the end of next month after multiple delays.
