I suppose one can still take a valise full of banknotes to the exchange.  However the bank probably will not allow the cash to be deposited into the exchange's account.  So, if the exchange allows the arbitrager to buy coins with that cash, it may be unable to honor the withdrawals by the sellers.  Unless the sellers go in person to the exchange to collect the cash. 

Unless there is a way to use the chaos elephant somehow to do that.  Whatever.