It’s basically the same as trusting an exchange with your keys. Who ever are the members of the federation? It requires trust, I should be able to verify. There should be some terms of conditions if my coins get stolen and 100% insurance. Or something like that.

Liquid offers “confidential transactions” so I can still be tracked back to you which is subtly different to end-2-end encrypted transactions like on Monero or Z-cash.

I maybe be mistaken.