I do not know precisely what this means, as I have no contact with the developers anymore: but this is what was agreed upon.
They should no longer be trusted, their binaries should not be executed, their site should be considered compromised, and their key should be treated as revoked. It may be that they have been approached by an aggressive intelligence agency or NSLed, but I don’t know for sure.
While the source of 7.2 does not appear to my eyes to be backdoored, other than obviously not supporting encryption anymore, I have not analysed the binary and distrust it. It shouldn’t be distributed or executed.
TrueCrypt’s formal code audit will continue as planned. Then the code will be forked, the product’s license restructured, and it will evolve. The name will be changed because the developers wish to preserve the integrity of the name they have built. They won’t allow their name to continue without them. But the world will get some future version, that runs on future operating systems, and future mass storage systems.
There will be continuity . . . as an interesting new chapter of Internet lore is born.