Closing a company is certainly not illegal. But evading an official demand is. What penalties or charges Levison might face depends on what the government is seeking. He could face a contempt proceeding, which could include jail time, if he refused to comply with a court order, said Albert Gidari, a lawyer with the firm Perkins Coie who represents companies on surveillance and communications law.
But the government might also be looking for ongoing or prospective surveillance of Lavabit's customers and access to the company's systems. Given Levison's drastic actions, that is likely the case. Shuttering the company would do little to stop the authorities from gaining access to Snowden's or any other customer's old emails. But going out of business would mean Lavabit couldn't comply with any future surveillance.
"It may be that by shutting down the service, he can't comply, and so it's doubtful he would be held in contempt," Gidari said. But "shutting down the service could be viewed as obstruction of justice, so he isn't necessarily out of the woods yet."
Levison faced two bad options. That helps explain why Silent Circle's executives may have decided to avoid the quandary altogether.
Levison's decision was greeted by some as a heroic act of protest. A fund was set up to help pay for his legal expenses. "We've already started preparing the paperwork needed to continue to fight for the Constitution in the Fourth Circuit Court of Appeals," he wrote.
But Silent Circle's decision added a new wrinkle. The company appeared to be making a business decision, rather than a legal or ideological one. It had not been served with a government order. Indeed, the company, which was founded by an ex-Navy SEAL and the inventor of the first widely distributed commercial encryption software, says it counts intelligence agency employees and special operations forces as its most loyal customers. Silent Circle has billed its encrypted email service as a way for people with secretive jobs to communicate securely, not as an end run around federal surveillance. (The firm has been known to help privacy-minded journalists stay beneath government radars.) By preemptively shutting down its email service -- and purging all data related to it -- Silent Circle preserves its reputation as a secret-keeper. It will continue to sell its secure phone, text-messaging, and video services.
Companies may also find resisting NSA surveillance a losing battle. Recently disclosed documents show that the agency has the legal authority to collect and store any electronic communication that uses encryption. And if companies are storing email in servers within the government's jurisdiction, they may not be able to make good on promises to users that their communications are absolutely private and secure. In his letter, Levison said, "I would _strongly_ recommend against anyone trusting their private data to a company with physical ties to the United States."
The government has given no indication that it will back down from using surveillance orders to demand all kinds of customer records, from Internet searches to phone logs to email metadata and content. But what Lavabit and Silent Circle have done may mark the beginning of a resistance.
The truth is that for all the government's extraordinary powers under surveillance law and the NSA's global reach, the U.S. intelligence community is largely at the mercy of companies to help it monitor the world's networks. Indeed, current surveillance law was modified a few years ago to give telecom companies that assisted the NSA with warrantless wiretapping legal immunity from prosecution. Officials feared that without those protections, the companies would do everything in their power not to help the government.
If enough companies were to take the drastic step of shutting down, the government would find itself in the dark on potentially crucial intelligence. The likelihood of this happening is still remote. But the fact that two companies would take such drastic measures to preserve their independence and keep the government out of their business may speak to a dawning awareness: While the government may hold the legal power, it is not all-powerful.