Topic: Know why the exchange wallet are not safe - page 2. (Read 511 times)

Exchange wallets are generally not considered safe for keeping our own money, yet we have to keep money in all these exchange accounts when needed. There are enough reasons to consider exchange wallets risky, exchange wallets are completely under others so if ever there is an exchange scam then our money will be completely lost there. There have been many times in the past that users have deposited all their money into what they call their trusted exchange and lost that money while depositing. Keeping money in an exchange wallet certainly offers some benefits that are not available in mobile wallets. 

Although keeping money in exchange is somewhat risky, we need to keep money in exchange wallet to manage our trading investment and other tasks properly. Some exchanges have cheated users in the past but not all exchanges will cheat users. We have to trust some exchange. If an exchange cannot be trusted then we will never be able to use the exchange properly.

I think the hacking problem may be more present because many top exchanges have faced hacking problem and there are many investors lost money so you should deposit short time money in exchange wallet. Those who have big funds do not like exchange wallets and most of the time they collect hardware wallets.

Not keeping your assets on the crypto exchange is absolutely an old, unwritten rule that has been echoed by almost all of the people in crypto communities. "Not your keys, not your crypto" is a slogan that makes me want to invest in a new project that claims to be a solution to how we trade nowadays. Both CEX and DEX have their own weaknesses, and these projects claim themselves as "the first shariah-compliant hybrid exchange," offering new ways to trade by keeping our assets and holding them in our own wallets (non-custodial) while trading in the CEX efficiencies. I hope it truly could solve the current issues since we've lost our money by trading in either CEXs or DEXs in the last few years. I hope HEXs will be popular in the next couple of years. 

😂 You do have a way of describing things. I'm laughing my head off here while envisaging the scenario with a tambourine.

I've encountered something of such, though on another exchange that wasn't Binance. Withdrawal commission skyrocketed immediately it became an emergency. It was a sad experience for me. It's the same thing when tokens are locked perpetually and you can't withdraw from a platform, though you can see their value rise. Frankly, like we say in our local parlance, we've seen "shege" in this industry. It remains "banza".

Many crypto users keep their funds on exchanges and many of them are well aware that keeping funds on exchanges is not safe but they keep funds on exchanges for trading purposes. In recent times we have seen many crypto exchanges crash resulting in many people losing their hard earned money just because of holding funds in those exchanges. In fact, if a crypto user does not have control over their funds and their funds are controlled by someone else, then this is by no means a safe way to hold funds. So crypto users must learn how to use a wallet and gain experience in how to keep funds secure.

Most people don’t know the risk involved in leaving coins on exchange, most people just think about the positive aspects, they believe their coin can easily be accessible whenever they want, some of them think their coin is more secure in their exchange account than in their own wallet, but they don’t know that if anything happens to the exchange, their all the money which they are having in the wallet will be gone also, exchange is the worst place we’re a coin Should be stored, any money you leave on exchange, just know that you are not the one in control of the money.

Normally, knowing to store coins on an exchange wallet isn't a good idea, was common sense already for a long time.
But after what happened to FTX, where an mostly unregulated exchange collapsed due to passing customer funds undisclosedly to shady yield farming nonsense, it's surprising for me, how someone still can sleep calmly when his coins are stored on an exchange wallet.
It's abhorrently risky.
We need always to know "not your keys, not your coins" is crucial to know about.

Good reminder, @OP!

People of your type always think that nothing will happen to them since you are the most ordinary client of the exchange, and it should not let you down. But accidents are never accidental; one day the exchange will discover that your bitcoins have not passed the AML check (their robot will simply choose you), and you will have to dance with a tambourine to prove to it where you got your bitcoins from.
I’m already silent about the fact that suddenly your country will become inconvenient for Binance, and they will ask you to urgently withdraw all your funds, and the commissions will become unimaginably high.
Accidents are not accidental. Don't wait for them.

I think everyone are all aware of this as they dont have private keys to accoutn for all their asset. There are people who holds asset there it doesnt mean they dont know that. Of course they are trading some assets and possibly got some set limits for some tokens. Also there are other features on exchange they are fond or using thats why they still have asset there. As a bitcoiner I know the risk of the issue and also holding majority of my asset on a non custodial one but sometime do cex activity like on Binance when theres an launchpool or launchpad.

Getting your points right, it should be without the seed phrase we can no longer access our bitcoins. The seed phrase are the entry way to access our bitcoins and if anyone should have access to it then we are at the risk of losing our bitcoins, with the seed phrase anyone anywhere would have access to our bitcoins that is why securing if is very important but we should not secure it too much that we forget where we save them.

Securing the seed phrase can be very challenging for some people especially beginners, they might not know the risk of losing it or exposing it that's why they may get careless when saving it. Seed phrase needs to be saved with caution, it should be saved in a place where no one else can reach them except people you wish to. Duplicate of the seed phrase should be made as back up and stored in a separate location just incase of unfortunate circumstance. Writing the seeds phrase on a paper is not ideal as paper can easily be damaged so it is best to write them on metal or an object that cannot be damaged easily.


Storing your coins in an exchange wallet is just like giving money to someone else to hold for you, the person can do whatever they pleases with your coin because you are not in control of your wallet. The cryptocurrency world is very dangerous world and no one can be trusted that is why it is advised to never keep your assets in an exchange wallet. An exchange wallet is a custodial wallet which does not give you access to the seed phrase and private keys and keeping your assets there means you are keeping your assets in someone else’s wallet. Always remember “Not your keys not your bitcoins”.

The dangers of using an exchange wallet is that anything can happen, the exchange can get hacked by scammers or the exchange can scam it's customers and run away with their funds. It is advisable to always use a Non custodial wallet where your wallet keys and assets will bee in your possession and the only risk will be how efficient you are in securing your private keys and seed phrase.

Exchange is not just safe for people to leave their coin on it. Before now we saw how how many exchanges crashed down and no where to be found again. Because of how exchanges are easily hacked by hackers is the main reason why people should not use the exchange to store crypto.  Exchange is a centralized wallet and from it what people can easily manipulate to get access to it. It is better to have your in a non custodial wallet to secure them better.

I always used to tell crypto newbies that the security of their asset should be the most paramount thing to them; otherwise, their crypto investment might just be a labor in vain.

Since I joined the forum in 2022 until today, the Bitcoin investment rules of "Not your key, not your coin" It has always been sung like a song here, and it has been talked about many times to the extent that every Bitcoiner should now be wise enough to know that storing Bitcoin on a centralized exchange is not the right way to store their coin.

Well, OP, your idea is not bad, which is to always keep everyone on track to be conscious of their security and not store their coins on CEX.

We've been telling that to newbies that exchanges don't give us our private keys and it's still a good reminder to make those people that who likes to keep their funds in exchanges.

Many debacles have came and made people lost their deposits on those exchanges that have been hacked and closed. Why for the closed ones? It's because they were confident and kept there and missed the notices of their closure so with the given period of time to withdraw their assets, they've missed it due to forgetting it. A simple thing but a big mistake.

I don't know if there's still an exchange where you can get the private key although it was an eth wallet that's why I am not sure about in BTC and that was before anyway. By the way, reason number one should not be included instead it should be not your keys, not your coins. This is because exchange sites doesn't let you have full access to the wallet that is used in that exchange but only in sending and receiving and nothing else unlike the wallet where you have full access is you can import it in other wallet providers to manage your Bitcoin.

I just finished your post but I like your advice quite a bit. Here I am one of those people holding his coins in exchange. In fact I used my Binance exchange address instead of my own wallet due to the recent exorbitant increase in Bitcoin transaction fees. Currently my exchange is fully funded by the money I receive weekly. But some say it is safe and most people say it is not safe to save money in exchange. But I also know that one should not invest in any exchange because at any moment we can be in danger. But I will try to invest in my wallet soon.

Yes, you are absolutely right. But many people who use exchanges to store their cryptocurrencies dont even know what the seed phrase is for, let alone how to properly protect it.

Point of correction. Exchanges do not give users their seed phrase or private keys. The exchange holds full custody of your bitcoins. This is why we say “Not your keys, Not your coins”.

There are dozens of threads on why it’s not a good idea to store coins on exchanges;

Reminder: do not keep your money in online accounts
Binance & Nigerian; Most recent development on frozen funds without prior notice
Recent events should make everyone withdraw all their coins to their own wallets
Recent events should make everyone withdraw all their coins to their own wallets: Part 2
Recent events should make everyone withdraw all their coins to their own wallets: Part 3

To be honest, I don't think that's so simple. You can also keep your fiat cash money or gold at home. But how many people do that? They are afraid of being robbed or to lose their banknotes in a fire of their home, that's why they prefer to leave their money at banks even if they've to pay for that. For Bitcoin risks of losing funds are even higher, because thieves can steal your money from you remotely, and your seed doesn't need a fire to be lost or destroyed. So IMO when banks will accept cryptos or when exchanges will be older, you will see more people using their services to store their cryptos.

In essence, exchanges are not wallets for storing assets. The exchange does not provide seed phrases or private keys to asset owners.
Freedom is theirs and not ours. The assets stored on the exchange do not belong to us, but to them.
Why is it not safe, for the reasons I have mentioned.
To be safe, use a wallet that is controlled by the asset owner. Choose a wallet that is open source and has been tested.

Not just protecting your seed phrase to know how to use it when you want, also know that it is important to make sure no one have access to it. You can be hiding your seed phrase where someone will see, they might not steal it but it can be copied and that's all. Therefore, make sure you are the only that have access to your seed phrase by hiding them in a secrete place where only you will have access to.

Exchange wallets don't have seed phrase, your bitcoin will be in the exchange total control if you keep them in the exchange. Take exchanges as a market places where you will only buy and sell, keeping your bitcoin with them is very risky because you have no control of them.


In general.
Avoid clicking phishing links.
Not your keys, not your coins.