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> If that guy did not have some kind of insurance like banks do, how can he refund anyone?

Bitcoin is a relatively new thing, would not be surprised to start seeing bitcoin insurance for these types of services.

> Is that guy a US citizen ? can he be sued by his clients ?

I think it would depend if his clients have contracts, otherwise its a caveat emptor deal, especially when dealing with bitcoin.

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There was actually a Bitcoin "insurance" provider for a while. Like everything else in the Bitcoin economy, it was entirely unregulated, basically a scam, and ran with everyone's money.

Normal bank insurance is done by the central bank, which can lend unlimited money to cover this kind of hole.

(A large part of the Euro crisis was the Euro central bank refusing to backstop banks itself, delegating that to national central banks which can't print money and can therefore run out themselves)

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