How to Protect Yourself If an Exchange Collapses

You can't stop an exchange from collapsing, but how much you're exposed — and how much you lose — is largely up to you. This checklist keeps that risk minimal.

1. Self-custody long-term holdings\nThe single most effective move. Coins you plan to hold for months have no reason to sit on an exchange. Withdraw to your own cold wallet and secure your seed phrase. Keep only what you're actively trading on-exchange.

2. Spread across platforms\nDon't park everything on one exchange. Use a multi-exchange strategy to spread counterparty risk — if one fails, you're not wiped out.

3. Watch the warning signs\nBefore FTX and past blowups, there were usually signals:\n- Withdrawals slowing, delayed on various pretexts, or paused.\n- Abnormally high "yield" products (a sign they're gambling with your funds).\n- Founders/platform tied to negative rumors, opaque related-party dealings.\n- Mass withdrawals and the start of a bank run.\nWhen these appear, withdraw what you can first and judge later — better a false alarm.

4. Favor sturdier platforms\nMajors with proof of reserves, compliance licenses, long history and an insurance fund are less likely to blow up. See how to vet an exchange.

5. Keep records\nSave screenshots of deposits, trades and balances. If it goes into bankruptcy, these support your claim.

Core mindset\n"If your coins aren't on the exchange, you don't fear the exchange collapsing." Treat the exchange as a trading rail, not a vault. Save on fees day-to-day with rebates, stay safe long-term with self-custody — the two don't conflict.

Keep reading\nIs crypto safe on an exchange, not your keys, not your coins, self-custody guide