[captainmuon]

If the government really wants to kill bitcoin, its a bit surprizing that they are pursuing this legally. Instead they should make it such that people cannot sue for their losses. They should define legally that bitcoin is neither money nor commodity, that it is of zero value, and that this is so obvious that it is impossible to commit fraud with it. It's your own fault if you pay money for something such obviously fraudulent. (Not that this is my opinion!)

If customers would not be able to raise claims, and frauds would get away with impunity, this would quickly destroy any honest businesses in bitcoin, and reduce it to a fringe phenomenon some people use to buy drugs anonymously.

I'm guessing the government really doesn't want to do that, because while it would reduce bitcoin to the underground, it would become even more uncontrolable. Rather, they'll try to canalize it through the existing banking system. Its already hard now to buy bitcoins anonymously, and it will probably become harder.