Topic: Another signal why to avoid CEX.... (Read 234 times)

What security will you expect if the Binance is hacked or they start more conventional way of KYC and ask for further documentation from your side restricting you of withdrawal? The funds on CEX are not safe at all and the only thing is big exchange like Binance has huge customer base and you can expect some legitimacy from them but there's no guarantee and you can check for hacks to have an idea about the same.So your wish but avoid keeping coins over these exchanges.

They have been into privacy breaches from a long time and restricting funds withdrawal without providing any strong basis so what else we can expect from them.

They are doing this for their personal benefits and using people funds as defence sheild in any case they go bankrupt but how is this even the requirements of SEC as if we see in one way those all are creditors not equity holders of the coinbase whose funds can be used as hedge against paying off the debts but if we go the other way they are actual owners of the funds with keys so they will directly deny you of any funds.

Right they are not going to publicise it but when things started to reveal they have one common pharse that it's fine and just a formality for the proper functioning of the company but in reality they are government puppets doing everything on their will providing them with database of customer keeping track over them and denying them of their own funds.

You gift them your coins on trust basis and now it's depending on them how they handle it or even return you the favour so be sure before keeping them on CEX and them expecting you own funds is wrong assumption.

Being able to buy/sell instantly without needing to send over the funds, being able to transact off-chain instantly(Coinbase <-> Coinbase), among other things. Look at it in the eyes of a normie.

I don't disagree with you. However, if you are the kind of person who is only here to make a quick buck, and don't care about the fact you have zero privacy and zero security, don't care about the fact that you don't actually own any coins on a centralized exchange, don't care about the fact you will be spied on, censored, and dictated to, don't care about the fact that a third party will tell you if and when you are allowed to make a transfer, don't care about the fact that your coins could be taken from you at any moment and there is nothing you can do about it, and all the other downsides to centralized exchanges, then there is absolutely no denying that buying or selling on a centralized exchange (for a fiat pair) is more convenient than using a DEX.

I'm also not referring only to day trading, but rather any buying or selling. If you don't care actually care about bitcoin or anything of things it stands for, and are only here to try to get rich quick, then a CEX is definitely more convenient for you.

Trading, gambling, what's the difference. Both function unpredictably, both lead to more losses, both have mathematical strategies that make no sense, such as TA, both have gurus, both have to do with money.

And to be honest, I'd rather playing in a provably fair casino, gambling officially, knowing how I can win, what's the chances to lose, than to bet in a shitcoin with a sextillion units, a doggy thumbnail, a Twitter community/mob which always tweets with the hashtag, a non-existent wallet, brown-nosing billionaires to use it so I can dump it. That's pyramid.

Which, unfortunately, is all that a large proportion of users are interested in. Give up their privacy and security for the privilege of losing all their money on some trash altcoin which dumps >99% in <24 hours.

Trading. There is no arguing that once you are set up on an exchange,* trading is far more convenient with a centralized exchange over a true DEX. The general sluggishness of the fiat bank system will always work against DEXs, compared to the one click trading you can do on CEXs. Now, everyone knows I'd strongly argue that the convenience of such one click trading is absolutely not worth the zero security, zero privacy, and risk to all your coins you get with centralized exchanges, but you can't deny that such convenience exists.

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*I'd still argue that setting up an account on a DEX is far easier than on a CEX, though. Open an account and you are good to go, versus open an account, complete KYC, have that KYC rejected, wait 3 days for a manual review, upload more documents, take some selfies, link your bank account, deposit some fiat, and wait several more days for that to clear.

Why not? Are they secure? Yes. Are they private? Yes. Are they transparent? Yes. Are they cheaper? Yes. Are they mine? Yes. There's no competition between a DEX and a CEX; the former is much superior. Especially if you want to use/hold coins. The only thing you don't get is gambling, such as marginal trading and trading shitcoins every minute.

What convenience? Pretty much the opposite, I'd say. If I knew that my money could be seized, get frozen, hacked etc., I'd be less convenient.

So basically "Oops, you weren't supposed to notice this, but now that you have, we'll definitely update our terms cause otherwise we might get sued. Pinky promise we won't do that again!"

Also, he says he "believes" funds will be safe, while then immediately admitting that this has never been tested in court. I wonder which of these two things I should base my financial decisions on? Mandatory SEC requirement establishing the literal law, or a tweet saying "wE tHiNk It'S fInE lOl!"

Man, fuck Coinbase.

As with every centralized exchange, what they promise on social media is absolutely irrelevant. All that matters is what the law says, and as above the law says anything stored on an exchange does not belong to you.

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I think we need to start correcting people when they say "Oh, I store my bitcoin on an exchange." Based on the above, the correct response is "You do not own any bitcoin".

That is all correct as long as centralized exchanges are used as a wallet but not so much when they are used for trading which is what they are meant for.
The problem is with all the shortcomings of CEX there isn't any alternative that can compete with them so that those who want to trade bitcoin can use. I know we have DEX options but they still can't compete. That means your title is not completely correct, people must never store their coins on CEX but they can continue using them for trading as long as they understand the pros and cons.

I mean, that's pretty much the risk in exchange for the convenience of having the funds on a centralized exchange. In the first place though — if we're talking long term, why leave your funds on centralized exchanges? You're totally defeating one of the main purposes of bitcoin/crypto, which is having self-custody over your money.

When I've seen an article that Brian Armstrong that said that people could lose their money on Coinbase while this hot issue with Luna is fresh. I'm not surprised.
He's frankly telling the truth and hopefully, those people that have put their whole trust in exchanges and using them as their storage should think again and avoid storing it there if they are not trading at all. It is also one reason why I don't do it anymore. When I was still new, I'm confident with it but after realizing that it shouldn't be a common practice, I never did that again.

So far Binance is the main CEX that I trusted because of their capabilities like reserve funds, etc. Plus, I have enabled multiple layers of securing my account in which the hacker will find it impossible to compromise my account. Back then, someone did tried to attempt in accessing my Binance account, so I just enabled a very strong password, 2FA and Google Authenticator. Recently, they've also added biometric feature.

However, nothing is guaranteed or promised that our funds would be safe from hackers by just storing them in CEXs. There are instances where our funds are going to be freezed or disabling withdrawals due to congestions and other reasons. It's better to keep them in a non-custodial hardware wallet like the Ledger Nano S for you to have full control.

I wouldn't count on that and every time I send my money to Binance or any other centralized exchange I am well aware of the fact that it may be the last time I see them. Once shit hit the fan, its gonna be "free for all".


People do it for myriad of reasons, but most common one is that majority of people that are into crypto don't really care about whole that be your bank thing. I know a guy who is a veteran stock trader and naturally he invested in bitcoin, but instead simply buying it and storing it on his hardware wallet he invested in it via Grayscale. I explained to him several times how easy is to set his own cold storage and what kind of contingency plan he can set in case something happens to him, but he just doesn't want that responsibility. And we are talking about the guy who was senior developer in a big tech company before he quit to go full time stock trading and has no issues grasping bitcoin technicalities.

AFAIK, binance has a reserve fund that they might be able to use to keep their customers safe in certain situations, but in the end we can't really 100% trust any platform as we don't have full control over the funds other than just them.

It is of course very insecure and may not be the best choice for storing investment assets on a particular platform regardless of how good its reputation is. This has been suggested quite often and we can only reduce the risk when funds are held in HW or non-custudial wallets.

Can someone enlighten me on this, we know that Binance has offered SAFU to their customers, do you think they can able to stand as what they've promised to their clients?

This is sad that we can't trust CEXs storing our assets in a long term, they're not safe at all because anytime they have a right to seize and freeze our assets on their platform.  Though we can't blame traders that they will need to use CEX because of the trading volume for a quick profit, it should always withdraw your fund from the exchange and don't let this sleep on their wallet.

Regarding Coinbase bankruptcy that was written on their ToS, just a warning, and maybe all CEXs will do the same, it's more worst if it will end up as an exit scam.

It may not seem as much, but the campaign against centralized exchanges as a storage point has some sort of impact on the users and would have made some to rather go for self custody over handing over your funds to a third party.
There would always be people who would not change despite the different warnings; banks can freeze your accounts at any time and require multiple credentials on registration and yet are very popular, so the concept of full transparency to any financial organization with perceived reputation is wide spread.

Many would argue that coinbase should not be going bankrupt anytime soon; however, the idea that your funds can be taken away at any time, frozen pending investigations, and these third party exchanges can change their ToS at anytime and you have to agree to the changes to keep using their service (with your funds in them) is already enough signals to avoid Cex.

According to Coinbase’s CEO, the highlighted part of the paragraph is derived from a SEC requirement, whereby public crypto companies are required to disclose that kind of information. Ofcourse they complied partially (page 83), but as they recognized themselves, failed to forward the information to its customers in the TOS (so far).

See: https://twitter.com/brian_armstrong/status/1524233480040710144

One more thing to consider when keeping funds on Exchanges (besides potential hacks, account freezes, nominal data leaks, and so forth).

Cexes are just a whole drama, they give you new series of episodes with different suspense. I don't understand Why anyone will want to buy coin on an exchange and willingly left them off guard on centralized exchange, this is not the first time such threats comes from centralized exchanges but the advices here are not working for them, until these guys keep holding them off from their life savings and later cry out on those who can't help them.
One of the 1001 ways of loosing your coins is keeping them on an centralized exchange, you don't know when they will come and say your accounts has been flagged, everyone should take caution when they say something bad may likely happen.

This has been said many times and advice given to newbies and other members that never ever keep your funds on Centralised exchange as they have the custody of your funds or in simple words say they have keys to your funds and can easily spend them if they wish to do so or in any other case they turn out to be scam.

Not your keys not your funds is common phrase you might have heard of but still we see huge volumes over these exchanges and people trusting them like they will never cheat them or funds are safe but they have no idea about it.Keeping your funds on exchange have some other problems also which are not unnoticed but still some prefer to keep them over exchanges :

1) Privacy : You should not except any privacy when dealing with CEX at all as your personal information is always at stake and they can always trace you with additional requirements of KYC documentation to withdraw your funds with different levels

2) Freeze your account : They act just like banking system who can restrict you from withdrawing your own funds if sufficient proofs are not submitted and they found something suspicious in it

3) Using third party software for storing information and then it's used as phising scams against user who loose their funds in these scams.

There are many other things which acts as sign that you must take out your funds from these exchange and they are government puppet who will act according to their will giving out then full information and trace their users or providing them information about you.

Re: Coinbase the most anti-Bitcoin organisation. Make #DeleteCoinbase great again

Binance selling data to Russian authorities

But this thread is also created with the same intention of warning you all that you should stay away from these CEX for safety of your funds

Coinbase can take your cryptos in case of bankruptcy


They have their policy that in case of bankruptcy they will take your funds as they are deemed to be your property so how safe you assume yourself? Or being too optimists that this will never happen and your funds are safe there forever?

I don't how many more signals people want to take out their funds from these CEX and have store them on non custodial wallets or HW with backup of their seeds and passphrase on offline places with security.

There are lot of threads explaining these matters on the forum like this one from @o_e_l_e_o explain it in best way :

Why beginners should pay attention to their privacy

If you still are keeping them on these exchanges then regretting afterwards will not have any impact or safeguard your from these problems because you are not taking any responsibility of your funds and privacy so seeking advice later on will not have any impact



Your funds your responsibility so be sure how you keep them