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Firstly, I doubt his lawyers would say it was "illegal". No precedent. No law on the books regarding bitcoin and securities.

Further, you would WANT any litigation because if any federal judge said, this is just a virtual game as BTCT stated in their policy blah blah blah then that would be a win for bitcoin. Something the government does NOT want at all.

Chances are either he's just tired of doing it (doubt it) or he got a letter from SEC. Rather than caving he should challenge.