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Suppose that one or more high-level officers at a stock brokerage, or other retail financial institution, decide to embezzle most of the assets held there.

The embezzlers liquidate the assets into cash, then exchange that for various cryptocurrencies. My impression is that some cryptocurrencies are truly untraceable and anonymous.

They might leave the country beforehand, and do this remotely. If not, they would transfer the money and then immediately fly to a place where they know it's feasible to disappear.

Presumably the embezzlers would have set up new identities beforehand.

There would be little or no assets left to recover in the subsequent bankruptcy of that financial institution.

Is this a plausible risk?

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  • Which country? Can you give an example of a "uninsured financial institution"? – Morrison Chang Mar 19 '20 at 5:30
  • This risk applies to any nation; I am thinking mainly of the United States. This might be an issue for various institutions, but I am thinking about stock brokerages. There is the Securities Investor Protection Corporation (SIPC) for the USA, but my impression is that such type of insurance isn't mandatory and has some limits anyway. – NotAnAccountant Mar 20 '20 at 21:19

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