Lavabit, a secure email service reportedly used by Edward Snowden, has abruptly shut down its service in apparent response to a US government surveillance order.
In a cryptic announcement the company's owner, Ladar Levison, said: "I have been forced to make a difficult decision: to become complicit in crimes against the American people or walk away from nearly ten years of hard work by shutting down Lavabit."
Lavabit had around 30,000 users. The service encrypts all emails before they are stored on the servers and only the password holder is able to decrypt the messages through a secret passphrase, which is not stored by the company.
From what Levison has been able to say, it appears that the decision is a result of a secret court order issued around six weeks ago, demanding that the company hand over private information.
"I wish that I could legally share with you the events that led to my decision. I cannot. I feel you deserve to know what's going on - the first amendment is supposed to guarantee me the freedom to speak out in situations like this. Unfortunately, Congress has passed laws that say otherwise," Levison said.
The company refused to cooperate with the government and has now set up a legal defence fund, accepting contributions through Paypal in order to help the team with "defending the constitution". Levison has already began preparing papers to fight the case in the Fourth Circuit Court of Appeals, something he hopes will eventually allow the firm to be relaunched.
By shutting down the service, Levison is keeping a promise to customers that the company would "never sacrifices privacy for profits," something which Kurt Opsahl, a lawyer with the Electronic Frontier Foundation says is particularly rare.
Commenting on the move, Opsahl said: "Given the impressive powers of the government to obtain emails and records from service providers, both with and without legal authority, it is encouraging to see service providers take steps to limit their ability to access user data, as Lavabit had done."
Following Lavabit's decision to cease operations, encrypted communications firm Silent Circle has closed its Silent Mail service. In a statement, the company said it had not received any government orders but, after the closure of Lavabit, "can see the writing on the wall".
Silent Circle will continue to provide its secure phone and text service.
A recent report by the Information Technology & Innovation Foundation estimates that the revelations about US government surveillance could cost the US cloud computing industry up to $35 billion (£22.5 billion) over the next three years.
Adding weight to the claim, Levison ended his Lavabit closure announcement with a strongly worded warning to Internet users: "I would strongly recommend against anyone trusting their private data to a company with physical ties to the United States," he said.