bringer of illumination said:
How could ANY modern day encryption not be secure enough?
I mean, last I checked, even law enforcement agencies were entirely unable to crack truecrypt
Because even if encryption is easy, key management is hard.
And key management especially becomes hard once you start making requirements to the system. In the case of Mega, the system not only has to be able to store your files. It also needs to let OTHER users download those files through a special download URL which includes a key (without those users knowing your password). Not only does the data have to be securely transmitted over the internet, but it has to be available on a wide range of computers which can provide the correct information for decryption/download (which forces some of the key storage to take place on Megas servers, which can be seized by the FBI).
Also, since it is browser-based, the platform can have some problems. JavaScript, which is the system they use for the encryption, might be limited in how well it generates random numbers, which is important for how secure the encryption is (if you can break an RNG, you can break the encryption), and might also be limited in how it can gather entropy (used to make the RNG more secure/random).
Compare that with TrueCrypt, which has the freedom to implement any RNG system it likes, and only has one basic functional requirement (encrypt/decrypt stuff for anyone who knows the password and/or has the correct keyfiles), and which can store the (encrypted) keys locally on the partition or in the container that is encrypted. The latter is much more easy to secure, and even then TrueCrypt actually has weaknesses (more specifically, the Evil Maid [http://www.schneier.com/blog/archives/2009/10/evil_maid_attac.html] attack).
This, btw, is one of the reasons that the US military doesn't encrypt the video streams from Predator Drones, even though it allows terrorists/enemies to watch the video as well. The failure properties of terrorists watching the videos is far less severe than the problems that arises from the key management for the video streams (imagine ground soldiers in the field not being able to get critical intel from the stream because of a key management failure, or the drone not being able to be deployed because the keys aren't in place at the base that needs to watch the streams, and if we want our allies to watch the streams, we suddenly have to start sharing our keys with them).
Edit: One final thing i wanted to add, is that once you start a service like this where the company (Mega) has very limited information about what you're doing (since most of the stuff, including much of the information about the files, are encrypted from the users end), the service becomes harder to change. It becomes more difficult to add, remove or change features because you can't modify encrypted information without the keys. As an example, initially you couldn't change or reset your PW, although they fixed that problem now (mostly. You can't reset your PW if you aren't logged in and forgot it, you can only reset it if you ARE logged in through the 'remember me' feature, but forgot the PW).