1. How does the exchange ensure money is paid to the customers instead of Mafia or tax authorities?
2. If/when it can't, how these liabilities are included in the proof of liabilities?
(note: this is a real and difficult problem. That's why there are laws, regulations and deposit insurances around customer funds in finance, which, yes, fail occasionally. I just do not see how that can be solved by blockchain.)
Hence why proponents argue to do things on-chain, where we have built-in guarantees and this issue disappears entirely.
Why would they be segregated? The priority of creditors in a bankruptcy proceeding is controlled by courts that will order assets handed over to senior creditors whether they are holding "on chain" liabilities or not. It is the disclosure of such a contract that is the problem of understanding all liabilities, both on and off chain, as bankruptcy court doesn't care about the distinction.
> Client money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of clients of IBKR. This protection (the SEC term is "reserve" and the CFTC term is "segregation") is a core principle of securities and commodities brokerage. By properly segregating the client's assets, if no money or stock is borrowed and no futures positions are held by the client, then the client's assets are available to be returned to the client in the event of a default by or bankruptcy of the broker.
Because segregation is a necessary prior to enshrine further protection on customer assets.
No, originally you talked about segregation between crypto and non-crypto. I responded that there is no such thing. You then changed to talking about segregation between client finds and company funds -- do you see how this has nothing to do with the original point? How do you know a brokerage doesn't have both crypto and non-crypto liabilities? You don't. And the non-crypto can be senior to the crypto. There is no segregation between non-crypto and crypto and no guarantees about what kind of liabilities are held by both clients and investors.
> if no money or stock is borrowed and no futures positions are held by the client, then the client's assets are available to be returned
Right, this is exactly why you need to know what all the off chain liabilities are. Because when they come due, you can lose all your crypto because of a brokerage's off chain liability. Thus there is no such thing as a proof of solvency.