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The only way is to sell them back to fiat on the same exchange

That's just stupid.

why? At least you have a "proof" that you do not have the coins anymore... Depending on the situation it does or does not matter.

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proof for who?
I don't give a shit about govs knowing how much coins I have. They do not have any power over my self-custody coins.
I give a shit when bad guys got my personal info from leaked KYC data and use it for other shit...

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