One may wonder why the horseshoe crab is sensitive to endotoxin and, furthermore, how does the crab benefit from this phenomenon? As we know, seawater is a virtual "bacterial soup". Typical near-shore areas that form the prime habitat of the horseshoe crab can easily contain over one billion Gram-negative bacteria per milliliter of seawater. Thus, the horseshoe crab is constantly threatened with infection. Unlike mammals, including humans, the horseshoe crab lacks an immune system; it cannot develop antibodies to fight infection. However, the horseshoe crab does contain a number of compounds that will bind to and inactivate bacteria, fungi, and viruses. The components of LAL are part of this primitive "immune" system. The components in LAL, for example, not only bind and inactivate bacterial endotoxin, but the clot formed as a result of activation by endotoxin provides wound control by preventing bleeding and forming a physical barrier against additional bacterial entry and infection. It is one of the marvels of evolution that the horseshoe crab uses endotoxin as a signal for wound occurrence and as an extremely effective defense against infection.Photo via Fresh Photons, but to read about this, I recommend the Horseshoecrab.org website.
Addendum: A related story in the Washington Post in May 2012 reports at least an apparent temporary recovery in crab numbers.