Topic: Why is it bad to leave crypto on exchanges? (Read 1079 times)

It’s simply because you do not have the custody of the assets there. Exchanges can freeze your account under any circumstances and has the power to suspend deposits and withdrawals. The worst thing would happen is if an exchange would disappear like thin air due to massive server hack, etc., where the possibilities of seizing all assets of the users are high. This is why we don’t trust on exchanges to store our crypto assets, but only use them for trading purposes (e.g., spot, futures, margin, etc.).

touch wood so far i've never experienced such horrid. it's an informative thread, i shall start looking into taking out my crypto from exchanges. need time to learn the alternative ways.

• Mt. Gox (2011) - First major breach in the crypto world.
• Bitfinex (2016) - Hackers managed to steal coins worth over $60 million.
• ZAIF (2018) - Total losses were calculated to be around $60 million.
• BANCOR (2018) - Raised good fund from an ICO and lost worth $23.5m.
• COINCHECK (2018) - Hackers used a phishing attack to access hot wallets and stole crypto worth $534m.
• Upbit (2019) - Criminals managed to break into the exchange and steal over $45 million in a single transaction.
• BINANCE (2019) - The hackers withdrew over 7000 bitcoins from its hot wallet.
• CRYPTOPIA (2019) - Exchange was hit by a major attack that resulted in total losses worth $15.5m.
• COINBENE (2019) - Cybercriminals managed to take away over $105 million in cryptocurrencies.
• KuCoin (2020) - Criminals managed to steal over $281m worth of coins and tokens.

Biggest Crypto Exchange Hacks

Above were few of the biggest hacks in the history of cryptocurrency exchange. This is the prime reason why people aren't suggested to keep hold of funds in exchanges.

there will always be a shortage of every exchange because anything can happen, but if you can avoid it from experiencing it is certainly very good, but it is not easy to anticipate this. what you say is true and needs to be done to continue to be able to place your funds in private wallets, which have the least risk of being hacked.
Currently, there are many wallets that are safe and available and easy to use, just adjust it to the needs that we need.
Indeed, avoiding storage on the stock exchange is something that needs to be done continuously, if you have to, don't do it for a long time.

In the very question of this topic, you claim that it is bad to keep crypto on exchanges, which means that you realize that it would be better for you not to do this. As I understand it, you are "held" by the paid interest that you receive from storing your crypto on exchanges. You are risking your money for these small paid interest, because exchanges are periodically gets hacked, exchanges can go bankrupt or just block your money under some pretext. Most of the comments on your questions contain recommendations NOT to store your crypto on exchanges, therefore, for your own good, it will be better if you refuse meager interest, but save your money by withdrawing them from exchanges.

Well, take the example from those hacks that has happened within those exchanges in the past.

A lot of funds were robbed and hostaged that they can no longer get because the exchange is also a victim and they have never planned on how they're going to refund those customers that have lost their funds.

Those little interest that you may get won't be enough to compensate your lost to them.

Your private key is the most important aspect determining the security of your crypto asset, and exchanges have access to everyone's private key, thus your coins are not protected. You are responsible for retaining your private key, which is why non-custodial wallets are the greatest option for storing our money because we have complete control over our wealth because we have our private key.

For any exchange or trading platform to steal your funds they you should know there is a wrong attempt by either constantly login in with wrong password or with wrong 2FA while some inputting wrong trading pin, exchange do have trading pin before placing order to sell or buy at this point if inputted wrongly such account will be freeze or lock till all verification has been done.
so since i involved in trading i have not experienced such action from any exchange.

I mean it’s risky to leave your funds in the exchange for a long time even if you are getting interest. Crypto exchange is different from a bank and you can’t always trust the level of safety they have for funds. Hacking is a possible threat too. There must be many people who might be doing the same for getting regular interest on their bitcoins. If you are really sure about the safety and compensation plans of your exchange then you can keep your funds there.

This is a rhetorical question that have been sung countless times like a song here.
They can be incompetent in their security and privacy and this will sure lead to loss of your coins
So it's best you have full control over your coins this is one of the main roles Bitcoin plays to have financial freedom over our Money.
So don't get your coins and Bitcoin in third parties else you'll be fvcked.

There are several exchanges in the crypto market that have gained a good reputation, one of which is Binance and the other is KuCoin. If you save your assets on these level exchanges, I would say that your assets are safe. Why, many of us may have heard in the past that these were also face the cyber attack, but still no one was harmed.

As it's always said: "not your keys, not your coins". Leaving your coins in an exchange is like leaving the keys to a trusted third party. That "trusted third party" can either run away with your coins or lose everything in an instant due to hacks and/or theft. The same cannot be said when you have full control of your coins stored in a non-custodial wallet. I wouldn't recommend anyone to leave their crypto on exchanges, except small amounts for day trading.

With increasing KYC requirements, you're better off using decentralized exchanges or atomic swaps than anything else. Most people aren't that educated about crypto/Blockchain tech, so they'll leave coins in an exchange believing their funds will be safe for the long run. As far as I know, exchanges aren't liable/responsible for any amount of crypto left on their platforms. So there's no one to turn to if there's a major hack, scam, or anything that will make your lose your hard-earned crypto on a centralized exchange.

If only governments had a law which held exchanges responsible for user's funds, things would've different. They could treat centralized exchanges like banks, in order to hold them responsible for customer's funds. Crypto is starting to get into the mainstream, so it's expected regulators will jump in with the aim of legitimizing the space as much as possible. Just my opinion

You are being suggested to avoid storing your crypto on exchanges because that’s the least secure place that you can store your assets. Crypto exchanges can get hacked at anytime, although some of them have proven to be secure and have not been hacked yet, and also it all depends on the method that they use, just like coinbase.com: they have a cold storage where they keep majority of their users assets.

So, Coinbase might be a secure place to store your crypto because of the method they use, but over all you are being advised to have your coins stored in an offline wallet where you are in charge of the private keys; an exchange may have cold storage, but you don’t have the keys.

People who leaves their fund's there don't know the implications but some said is good ideas why the exchange can close and close with your funds, i have notice record of exchanges that run with people fund keeping funds their is not saved because either the funds is stolen by the exchange or by the hackers

Using an exchange to keep all your crypto holding is not a good idea cause anything can happen and account can be locked for any reason. I will rather keep my coin on non exchange wallet so when I want to sell it, I can also send it to an exchange to put it for sell than keeping all my holdings on an exchange. I see no reason why your coin should be on an exchange cause the worse might happen at anytime.

it has been answered and explained thousand time before and look at all the answers in your thread now? it is the vulnerabilities and the idea of exchange being targeted by scammers and hackers so best not to leave your funds inside this exchange or in other exchange .
You must have the KEY for you to tell that it is your funds.

Simply because exchanges can still have control over your asset and no one really like that. Plus the possibility of a certain exchange to get hack will always be there. Remember that all exchanges are prone to any kind of attacks since because there is huge money in there. Therefore, hackers will always try their best to get into the system and we will never know when can it become possible. So our assets will never be safe on any kind of exchanges whether it is a reputable exchange. So never use an exchange as a form of wallet where you store all of your funds.

It makes no sense storing your money in the exchange for no reason but is there anyone here did that? Except only to those who lost access to their account. Some exchange offers staking and other forms to earn when you lend your crypto to them but that's a different story anymore.

Being active like doing trades still has its own risk not because cryptos are volatile but because your assets are vulnerable to hacks as active traders doesn't withdraw all their funds but they keep most of it inside the exchange to save fees and time. That's still better anyway than losing all of your funds at once due to hacks. Rest only assured that we are using an exchange with good security.

So far, I've never experienced this except once, namely the exchange of cryptopia where until now my funds amounting to XXXXX have disappeared without a trace, while the policy for claiming is still to maybe return it
but whatever the exchange it is still possible to hack. then placing funds in a personal wallet is the wisest thing

There is one thing that I would like to share, a few months ago, the police of a country that is not Colombia, put Binance to investigate all Binance accounts of Colombians, and the Exchange itself blocked them all from submitting to the investigation going through above the integrity of their clients and the Colombian authorities, and until they finished carrying out their investigation they did not leave them alone, then that is a reason not to leave the money in an Exchange. I think that everyone is free to have their income wherever they want, but it is better to have total control over our money, without the need to submit to events imposed by governments and third parties.