Isn't this missing the entire point? The only purpose of the encryption is to give Mega a strong basis for being able to deny any knowledge of what the content

Isn't this missing the entire point? The only purpose of the encryption is to give Mega a strong basis for being able to deny any knowledge of what the content stored on their servers represent. It isn't like people are going to be using it to store trade secrets and diplomatic cables. The government isn't in the business of attacking a crypto system just to go after jor pirate consumer. These keys are going to be leaked all the time - after all, it's for piracy so you need to give them out to your friends etc. The trick here is that the resultant takedown won't include any obligation to take down all the other copies of the same film, since they've all been keyed separately and aren't deduplicated. Mega is an encrypted document service in the same way the pirate bay is a self publishing channel.