Secure your funds

Exchanges are not banks!

 You put in bank information, transfer funds the old fashioned way with days in between starting the transfer and actually receiving them in your exchange account. Your native currency flows into your account and then you purchase crypto with those funds. Now you have a little nest egg on the exchange. Just like your bank you have an app too! Looks like you have your wallet and your funds are secure, just like a bank.


You log into your account to check your account balance

0.00

Refresh, refresh….

logout, login…

logout, login.

0

It’s ok, take a deep breath, you just need to contact customer service. You find a contact form and send it. “My account balance is empty, I believe there is some sort of mistake. I’ve never made a withdrawal.” Send and wait.

Wait

wait

wait

No reply, find send another more strongly worded message. Send and wait

Wait

wait

Finally a response from the exchange!

Click.


“Dear Customer,

We regret to inform you of a data breach that involved the loss of some users’ fund from the exchange. We have identified your account as affected. We’re working with authorities to identify the actors and will be contacting you in the future as progress is made.

Sincerely,

Your Exchange”

Good, they’ll get them! The police will find the thief.

Only, no they won’t. There is no one able or capable of getting your crypto back. It’s gone. Once someone steals your funds there is just next to 0 chance you’ll ever be fully compensated. There is a chance the exchange may replace a portion of the funds from their own pocket, but no law or guarantees. The exchange is not backed by the FDIC who, in a fiat banking scenario would return up to $250,000 for US accounts.

Exchanges lost over 1 Billion dollars worth of value for customers in just 2018 and 2019 alone.

I’m saying don’t use exchanges, that’s not it at all. Right now an exchange is necessary to exchange your fiat for crypto. However, there are several simple steps you can take to reduce or eliminate your risk.

  1. Remove your funds as soon as possible after your purchase on the exchange.

  2. Use a Decentralized exchange. You’re keys remain yours and the transaction is only brokered through the exchange.