Custody debate: 2 stories, 2 sides in the last 3 days...

[JiiBs]

I think the first scenario is the worst case and most common. Not because of the amount that is involved but, because of how easy it is for these things to happen.

Centralized exchanges or exchanges in general are as well an open target. It’s public knowledge that these exchangers owns and holds Bitcoin making them a target for just any malicious player out there with the know how,
While the scenario of personal attacks and even possibly, lose of seed phrases are always subject to the individual’s activities. If you’re more private, then you’re more likely to go unnoticed and secured, if you’re not private, you open yourself up to attacks.

[serjent05]

A family in the US was taken hostage for cryptocurrency

This is an example of the "worst case scenario" of self-custody: somebody was physically attacked while guarding their crypto on their own physical person.

This scenario can also happen in centralized exchange custody.  Remember, the criminals are in contact with the Bitcoin holders.  Just as they force them to get the victim's non-custodial wallet, or have them transfer their Bitcoin to a certain address, criminals can also force the victim to log in to their exchange account and have them transfer the funds to the criminal's wallet.  If Bitcoin is too slow, criminals can always force the victim to convert it to USDT or any cryptocurrency that can be confirmed faster, then transfer it to the perpetrator's wallet.

The question I would pose to people is, what worst-case scenario is... worse? The answer to that is likely where you come out on the question of self-custody vs. centralized.

Of course, the worst-case scenario is the criminal taking the victims' lives after the criminal successfully transferred the victim's cryptocurrency.  I think nothing can be worse than that.

[Sammysmart001]

criminals can also force the victim to log in to their exchange account and have them transfer the funds to the criminal's wallet. 

A physical threat break standard security due to anyone can actually be forced to open his/her app at a gun point. If you do have your money on an exchange and logging it on and it shows your full balance, you do have a zero defense.

The use of tools like that of passphrase decoy wallet is the real power of self custody .a little balance can be hand over to do satisfy an attacker while you at the other end you keeping your main stash safe abd hidden.

[Felicity_Tide]

~snip

The question I would pose to people is, what worst-case scenario is... worse? The answer to that is likely where you come out on the question of self-custody vs. centralized.

Imo, I strongly believe that Cex hacks are far worse. The thing, we have to understand that these institutions are major targets. Top hackers like the very one behind the Binance attack, don't spend their time targeting individuals. They only go after institutions that hold large amounts of assets, making them attractive targets, and worst case scenario.

As for the other case, I also strongly believe that an attacker needs to have some information about someone's involvement in crypto before they can carry out a physical attack. I personally don't believe that most physical attacks that involves crypto, are coincidental. Having crypto in your possession isn't something that is written on the face, so there's always a chance that a victim at some point gave out a clue.