And what if the issuer cheats and cashes in down the line, or goes bankrupt and the court demands private keys so as to pay creditors.
No court can demand any keys that dont exist.
OK, as I said, I couldn't read the OP in DK. So the issuer is destroying the private keys? Do we trust that to be true? And anyway, thats just like photocopying a $100 bill, burning the original and selling the photocopy. Nuts.