I'm been a lurker till now, don't have 50 posts, so can't post this in the main thread, but it looks like Tradehill has been a victim of the California Money Transmission Act.  For anyone curious about the details, this Quora post from last year explains it.

TLDR:  Money transmission companies operating in CA now have to get licensed for domestic transfers (previously only for international).  Costs:
1.  $500,000+ (just in CA, not to mention 43+ other US states with similar laws)
2.  Requires background check, fingerprinting, the works.
3.  Jail for founders now a possibility under the PATRIOT Act for transmitting money illegally without a license.