Hushmail was always a strange operation to me anyway. If you need data at rest encrypted, why trust a third party with the keys? If you need anonymity, why would you want a key identifying your unique persona?
For the same reason that people choose Facebook web hosting over their own privacy protected servers. They are not tech savvy and know little to nothing about security. They don't even know what keys are. 10 years ago, they just knew that Hushmail offered encrypted email. It was the first service anybody heard of that did that. The non-tech savvy crowd is the niche that services like Hushmail exploit.
What is more interesting is what the EULA said about this sort of thing and if they hand data over without notification to the owner. I suspect that they did.
If you have a use case for using content signing and encryption, using a closed-source Java or other web applet is a pretty weird way to address it.