What made Instawallet better than Blockchain for an online wallet? why did people use it? what was the selling point??
Law enforcement hired hackers to screw it and now awaiting at the front door to take a much closer look at everyone who'll start whining about lost funds. :)
Also, this is something that a smart and savvy government would do. If large governments are ever smart and savvy, they're only that in specific contexts.
No online wallets are secure, nobody should be using them, but unfortunately the bitcoin system is still a bit too complicated for a lot of people.
Honestly, I am curious if the security researcher (who alerted them to this problem and then griped out lack of payment in the article) is the person responsible.
I informed some BTC places of security problems a few years ago, and was roundly ignored, although they put the fixes in place, from what I recall. I wasn't upset because I wasn't expecting anything.
EDIT
Reading that page . . . depending on a URL staying secret as your security? Wow, that is asking for disaster.
I don't like to shame people who make security mistakes, but if you are online wallet vendor, shouldn't you have some common sense?
They did say so at one time or another I believe, but that was long long ago.
The Bitcoin industry needs bank level security. They're doing some things right (most exchanges offer 2FA), but they've got a long ways to go.