...They could still correct the situation...
Exactly, and their actions so far are not very convincing.
They need to PROVE they are worthy, like through an audit, or the volume going back up.
Meh. Difficult question, basically asking: pick the lesser of all the existing pure evils
For me, stamp is still the most trustworthy exchange that I can trade on.
Here's why: Kraken looks like a great alternative, at least as trustworthy as stamp, but volume is non-existent.
I've used Btc-e and finex, but the fact that they're outside the EU's jurisdiction makes me not trust them all that much. That, times 100, for the Chinese exchanges.
Bitstamp has two major pro arguments in favor of it: a) registered in the EU, with accounts at a EU bank. Might not mean much to you, but to me it does.
b) major outside investment (10M USD, by Panterra).
Now for the bad side: a) they were hacked (but so far there's no evidence that this led to any shortage of funds - no withdrawal delays that I know of), and b) their volume is obviously declining (possibly because of fees being a bit high).
So, I'm still considering Bitstamp my best option, but by an increasingly smaller margin. I already asked them to do another financial audit, to prove at the very least the control of the amount of coins we expect them to have (yeah, I know, that's not a 100% safe way of auditing, but e.g. mtgox would have failed even that "basic" audit).
If we can get this audit within a reasonable time (about a month I can accept) I'll stay at stamp, if they fail to do, I'll start moving away from them, if for not other reason than out of principle.
I honestly don't think -any- of the larger exchanges hold ALL the bitcoins they should. Fractional reserve isn't exactly illegal (as far as I'm aware), and for exchanges it's a pretty easy way of using funds that would otherwise be tied down.
If they are, the real question is in the case of a coin-run, can they liquidate enough to provide full customer reimbursement? I'd hope so..
I could be totally wrong but until they provide an audit from a trusted third party I'd always assume the worst.
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Hmmm ... unusual ... lets see if this holds.
