They don't control transactions. They can't stop one person from buying or selling or trading Bitcoin for something else with another person. All they can do is mine more Bitcoin at a pre determined rate until all 21 million Bitcoins have been mined.
Are bitcoin miners legally liable for their misbehavior?
What "misbehavior"?
What if the miners convert all their bitcoin holdings into other assets
the price of Bitcoin would temporarily decline before recovering just as with any commodity.
and then go "on strike" (i.e., stop processing bitcoin transactions or demand higher transaction fees)...what happens to the bitcoin system?
Miners don't process transactions. They are not needed to process transactions. Its peer to peer on the Blockchain for all to see. All miners do is mine more Bitcoin. They don't control the currency or the Blockchain.
See my comment #30 above (about miners and transactions). Is that incorrect? Is so, where specifically?