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and those I know who still hold BTC, the few that have tried to cash out so far haven't received a single dollar, euro, yen, or pound.

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So what exactly have they "tried"? It's really pretty straightforward.

So if you transfer BTC into Coinbase, you can't get your money out?

$10k at a time, unless you make some kind of agreement.

There are also ATMs and other exchanges to tap. Cashing out a large sum is nearly impossible.

If you have millions worth of BTC, it's better to just auction them off at a discount to a large buyer.

To be clear: You can sell 100 btc today for USD. Coinbase will hold your USD (and the balance is insured). They will limit your withdraws to 10k, however. To take out more faster, you'll need to contact them and speak with a human. None of this seems unreasonable.

It paints a bleak picture of bitcoin runs on insolvent and poorly insured exchanges when the bottom falls out.

Coinbase is insured via FDIC, so I don't think "poorly" as an appropriate adverb.

Assuming everything goes smoothly in that regard, it’s still a limited coverage.

Nearly impossible? I don't have millions in BTC, but I do have six figures. I requested a limit increase with Coinbase and they bumped it up to 50K per day. I've had no problems withdrawing that.

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