It is not bad publicity at all. In fact he has, despite his problematic past, shown the strongest commitment possible to his clients. He could have sold or left

It is not bad publicity at all. In fact he has, despite his problematic past, shown the strongest commitment possible to his clients. He could have sold or left Megaupload long before things came down. He could have left the Mega idea behind and put his focus and money towards saver ventures. But instead he continues to stay dedicated to the cause he is fighting for. Showing that you are willing to fight for your cause, despite having powerful enemies, and sticking to your mission even after your company, your home and your private life have been raided, demonstrates integrity. And integrity is probably the best publicity you can get - especially when operating in controversial industries. I personally would love to see a Mega incubator that fosters an environment of similar challenging ideas (for example building on Mega's in-browser encryption).