I followed the e-gold saga for some time (some people I know are/were in the digital metal currency market).

I would call it a fiasco for a number of reasons:

1)  A number of accounts (as you pointed out) were seized.  Depositors lost millions of dollars with no chance for recovery due to the anonymous nature of the systems involved (one of the accounts seized was itself a DGC based on e-gold).
2)  Before the government raids, you could in/out exchange e-gold for other currencies with ease.  Today, is there *anyone* who will out exchange e-gold?
3)  E-gold claims it contacted the U.S. government on several occasions asking if it was subject to KYC rules, and each time they were told they were not subject to the laws (see Doug's blog on the e-gold site -- though you might have to find it on archive.org if it has been removed).  Then out of nowhere the government arrested the founders and halted all operations.  The founders were given the choice of either acceding to all of the government's demands on how they could run their business, or go to jail.