Incorrect.
If the service is not independently audited, is not regulated, and is not insured by a reliable and trustworthy underwriter, then assuming that you are always being scammed is the ONLY way to protect yourself from loss. Without proof that a services claims are legitimate, you should always assume that all services are lying.
This. Would you take $50,000 of fiat money and deposit it into some brand new bank, some business you don't know on the OTHER SIDE OF THE PLANET? With no way to contact the owner(s) in person?
No, you fucking wouldn't. Because that'd be absolutely 100% moronic. And that's exactly what thousands of folks did with Mt. Gox.
Hopefully these fools learned their lesson.
Not fools, and not moronic.
As a society, we've all been trained to trust in Brands.
MtGox as a brand existed for several years. Many people were aware of it, and it was talked about in the news. This brand awareness led to a false sense of trust and security in the same way that we trust the Coca Cola company to actually put Coca Cola in the can that we drink, and we trust McDonald's not to make their burgers out of dead rats.
On top of that many people seem to have developed a habit of trusting those who haven't scammed yet. If entity XYZ has been around for a while, and there aren't significant reports of loss yet, then people seem to feel that this is evidence that loss is unlikely. I sometimes wonder if this is an evolved trait that must be overcome with constant focus on the reality of the situation.
As an example, if you wonder into a desert and it hasn't rained in a week, you might naturally trust that rain isn't likely. As a survival trait, this would lead you to avoid the desert as uninhabitable. This natural tendency to trust that what you (and others around you) have experienced in the past is likely to continue in the future is exactly the type of tendency that scammers are aware of and take advantage of.
