The DoJ would simply get a judge to sign an order giving their forensics lab a snapshot of the virtual machine with the key sitting decrypted in RAM. Amazon wou

The DoJ would simply get a judge to sign an order giving their forensics lab a snapshot of the virtual machine with the key sitting decrypted in RAM. Amazon would be under a gag order not to tell you that they even had it (not that Amazon would even care to tell you anyway). If they wanted to pin it to you, they could easily show timing correlations between your client system activity and the VM activity. Probably they would also go to the person who lent you their credit card and threaten them with prosecution unless they fingered you. Cryptography is not going to save you from prosecution if you do any noteworthy crime. There is no security "in the cloud" from any government with a jurisdictional or financial relationship with the provider. (Though Tahoe LAFS is an interesting project).