Is Your Crypto Safe on an Exchange? The Post-FTX Truth

"Is crypto safe on an exchange?" The answer: it depends which risk, and how you handle it. Split risk into two types and you'll know what you can prevent and what you must choose around.

Risk one: counterparty risk (the exchange itself fails)\nThis is the lesson FTX taught everyone. When your crypto sits on an exchange, what you really hold is the exchange's IOU — its promise you can withdraw. If it misuses customer funds, is mismanaged, or collapses in fraud, you may not get your coins back. You can't personally prevent this — only lower it by choosing the right exchange.

Risk two: security risk (your account is breached)\nEven if the exchange is fine, your account can be compromised: phishing, credential stuffing, SIM swaps, malware. This risk you control — with a strong password, 2FA and anti-phishing habits.

Core principle: the amount decides the method\n- Small amounts for trading: keep on a reputable major exchange for convenience.\n- Large long-term holdings: consider self-custody, withdrawing to your own cold wallet. That's the famous "not your keys, not your coins" — see the full breakdown.

How to lower counterparty risk\nFavor majors with proof of reserves, compliance licenses, a long track record and an insurance fund; spread across several exchanges; never park your whole net worth on one platform. See how to vet an exchange.

Bottom line\nExchanges aren't unusable — they require using them well: small trading balances on majors, large long-term holdings self-custodied, security habits in place. That way you get the convenience without betting all your trust on one platform.

Keep reading\nProof of reserves, surviving an exchange collapse, security checklist