> If you have $99,990 in BTC, and $10 in cash, only the $10 is covered.

By the FDIC. Of course, FDIC only covers dollar-denominated balances (savings accounts, checking accounts, etc. etc.). Even money-market accounts (very cash-like) are NOT covered by FDIC, which is why money-markets get a wee bit of a bump in %yield.

Coinbase claims they have the BTC insured through some other means. I don't know how to look into those details or how trustworthy it'd be (ex: AIG "insured" a bunch of mortgages through Credit Default Swaps, which ended up being worthless).

But overall, the idea of losing a security through various means (ex: Credit Default Swap "insurance" turns out to be a sham and the mortgage debt is all worthless) is kind of "normal" in terms of financial markets.

Similarly, if all the BTC disappeared it'd be terrible for BTC-holders, but I think people generally understand that those risks exist.

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Look, I think Cryptocoins are stupid at this point (even proof of stake, but that's another thing). And Coinbase's service going in-and-out over the past day or so is clearly a threat (if BTC moves while Coinbase is down, you lose your opportunity to buy-and/or-sell at the prices you want).

But I don't think there's anything shady going on at Coinbase specifically.

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Now if you want to talk about shady business, we can talk Binance, Bitfinex, and Tethers. Plenty of shady things going around in the cryptoworld.