Well but fwiw, and just in my opinion, the death of the pure P2P business model wasn't due to legal issues. It was the overestimation - by Prosper and lenders alike (including myself) - of the power of people-to-people connections. True, there are a precious few number of borrowers who feel obligated to continue to repay even after the loan defaults. But in general, not only were early loans underperforming at a surprising rate, but even face-to-face meetings between some lenders (we called 'em "group leaders") and borrowers failed - again in general - to reduce risk (or at least not nearly as much as expected).
But even if one wasn't following the performance numbers that closely, surely Prosper's deletion of their online forums without notice served as a clue that "P2P" wasn't all that it was cracked up to be. Also at about that time, IIRC, Prosper started losing some of their key customer-facing people (Shira, AMF...).
But anyway, looking at Prosper itself, not only are they in an industry that has fallen way short of expectations, but they've executed poorly as you've read here. Now that they've had a total turnover of staff, they might be able to turn things around if they survive the lawsuit, I suppose. But I haven't seen anything in their defense which has merit, in my biased non-lawyerly opinion, and so it doesn't look good for them.
(Meanwhile, I'm a new and very small-time lender over at LendingClub.)