Now I'm confused when I read that people's funds can be stolen or frozen. Is that the way it works? If yes, then I've been giving people wrong information. And indirectly I've been lying to them.

This is happening because Steem/Steemit is no longer centralized when one entity decides to do something he will do it by hook and crook. It is quite different here on Hive as of now, but say for example if someone wants to do out here on Hive he can do. Let me explain:

He will buy more than half of the Hive in circulation. Create his 20 witnesses and then made them do whatever he wants, though this is not super easy. Justin had done it because he got help from the exchanges who had a lot of money with them.