Didn't the Mtgox people finally get their BTC back but only after a few years and the price 100x'd ironically? Either way, diversify ones portfolio including where the moneys are kept.
Don’t know if distribution has happened yet. But there were at least a few investors buying claims, so plenty of people were able to cash out.
You could say that’s actually a better outcome than losing your private key.
Web3auth/Torus and Argent trying to solve that problem.
But yeah, the moment you have key recovery, even if it's decentralised and requires multiple parties, you aren't 100% in charge anymore.
But, it's probably a good alternative to being 0% in charge with custodial wallets.
Unfortunately wallets have their cons too, and there are a lot of people who have lost their passwords or thumbdrives and thus access to their crypto.
No silver bullet.