Contempt of court? Fine and then jail him for non-compliance. Seize Lavabit's assets if required. I doubt he would have let it come to that.

But their solution was analogous to "won't give us back that alleged stolen $20 we told you about? We want your whole bank balance."

Aww hell naw.

I guess he made his point, but he screwed over his customers twice in this case. First by dumbing down his crypto to be easier to use and allowing it to be broken as it did by the feds, and second screwing every customer over by not complying and shutting down his service.