This story finally pushed me to creating an account. As far as I understand, the approach outlined in the exchange's MAD option requires the exchange to prove

This story finally pushed me to creating an account. As far as I understand, the approach outlined in the exchange's MAD option requires the exchange to prove that they have destroyed the funds. I assume that the exchange creates a new bitcoin address for each transaction. If the transaction ever reaches an unresolved dispute, it would be possible for the site owners to simply move that single address to their "long-term retirement fund^W^W backup system", instead of simply deleting it. At that point, if the system ever shuts down, the owners can then simply move (in reality: shuffle) all the supposedly destroyed funds to their own accounts. Apparently one can send bitcoins to any address, and an existing address becomes public only when it is used in a transaction. So the fund destruction can't just be a transaction to a so far unknown address - that would, again, allow the site owners to use their own addresses for the purpose. After thinking this through a bit, it seems to me that the only way to really prove that the funds are destroyed would be to send them to an all-zero address. While thinking about this, a friend came up with the idea of spending the destroyed funds exclusively on transaction fees. I don't know why, but I have a weird feeling that could still be subject to gaming the system somehow. A fascinating idea for a service, nonetheless.