"In other words, when NSA encounters encryption it can't crack, it's allowed to – and apparently does – vacuum up all that scrambled traffic and store it indefinitely, in hopes of finding a way to break into it [...]"
...because having unbreakable encryption is proof you have something to hide, right? And we all know having something to hide proves you are a criminal, right?
As we've seen, Apple and Microsoft are patent trolls as well. The problem as they see it, is to prevent the "parasitical trolls", as they might call them, from suing; while reserving for themselves the right to troll at will for purposes of monopolization.
It's a huge problem with law in the United States: the idea that everyone is subject to the same law. If only it were possible for Apple/Microsoft to be under one set of laws and the parasitical trolls to be under another, the latter would have been out of business years ago.
This is a flaw in the encryption software that allows you to read the memory of the system on which it is running. You not only have access to encrypted messages, but potentially the ability to look at everything in the machine's memory. (Basically the ability--at least--to view all user passwords, any other encryption keys in use by the machine, read the network configuration, and so on.)
Broken encryption means that when you sign on to your bank the attacker can read your communication with the bank.
But if you're running the broken version of this software, you might just as well hand your hard drive to the attacker. That's why it's worse.
In case no one's been watching, most of our worst government autocrats have an entirely different definition of citizenship than you or I. To them, citizenship is head-down, slow march, boot-licking obeisance to everything the autocrats proclaim; and never, ever question authority, rock the boat, or even ask the autocrats to explain.
To those autocrats, anyone who violates their "rules of good citizenship" must be silenced and then disposed of, normalized or otherwise rendered "harmless" by any available means.
Governor Malloy appears from this story to be one of those; the college president another.
DOJ must destroy all the files; all the real evidence. Because even the "evidence" it has taken is generally only metadata; that is to say, if the file has the same name and size as a copyrighted work, then it definitely is.
To defend itself, Megaupload needs to be able to show those files are not infringing, or that it did a reasonable job of removing infringing works in compliance with the DMCA. DOJ doesn't want them to be able to show that, since that might establish reasonable doubt.
So the best way to ensure that Megaupload cannot defend itself is the utter destruction of the files. This is why DOJ has been seeking two things from early in the case: To prevent Megaupload from having access to the files and; once DOJ culled out enough "culpatory" evidence to support their case, the utter destruction even of the files they claim are infringing.
All they want to remain is the culpatory metadata, against which Megaupload can offer no useful defense.