Governments define legality, and governments are likely to be some of Mitnick's best clients. Funny thing is, if I were Iran's government I would be concerned about buying exploits there because for all I know Mitnick has double-crossed me and given the US government info on the exploit and how to neutralize or detect it.
Pervasive encryption only helps if the endpoints doing the encryption aren't compromised, and this type of service is aimed at those endpoints.