You must be kidding? Misappropriation of funds is a crime and should be punished by law. Nothing to do with GLBSE beeing illegal. He just ran away with our funds. Thats how I see it.
From what I understand he passed these funds through to fraudulent asset issuers. He was just a middleman. It's a bad idea, but he didn't really profit that much himself.
Which is something that happens in teh investing world regularly. It happened to a union controlled pension fund I belong to
twice. The problem is that con artists at this level are very good, and fund managers are terriblely inexperienced. My union pension fund never got a dime back, and never will. This has almost nothing to do with the questionable legal nature of the exchange, but you guys got f*cked and the best outcome that you can expect is to learn from this experience and not gamble with funds that you cannot afford to lose with amature fund managers beyond your ability to punish for wrongdoing.