Right, so you encrypt locally, upload to Dropbox, pass the link to your friend, and they decrypt locally. Still not seeing why you'd opt to trust this doohickey.
If you haven't, well, people should use that other service instead of this one.
Either way: I'm still totally unclear on why anyone would allow a server to encrypt files for them. I don't even reach the question of whether it's possible to do it securely, because it seems like such a weird thing to want.