Centralized exchanges have come a long way over the past few years: the security is better, the token listings are more extensive, and the features on offer (such as futures, staking and decentralized finance) have come on leaps and bounds.
Using a CEX as a fiat on-ramp or to buy and trade is one thing, but keeping large sums on an exchange could spell disaster. Yes, your account could be hacked, or the exchange itself could suffer a breach. Even more ominously, there’s another risk: government!
- Canada’s Emergency Act speaks volumes.
- Top CEOs are warning their customers.
Kraken CEO speaks out
Canada’s emergency powers raised a question: What would happen if law enforcement asked an exchange to freeze an account’s assets? Would it be forced to comply?
The answer was yes.
In light of recent events, Kraken CEO and co-founder, Jesse Powell, has been encouraging crypto holders to take custody of their assets, warning that neither his, nor any exchange can protect accounts if the authorities decide to intervene.
Changpeng Zhao, CEO of Binance, also weighed in, reminding us that a CEX is a trading platform and not a storage solution!
The message is loud and clear, and it’s coming directly from the CEXs themselves: They are subject to the laws of the countries they are registered in, and thus cannot guarantee their ability to protect customers from overbearing government measures.
As we often hear in the crypto-space: “Not your keys, not your coins.”
Use CEXs for what they are, and don’t confuse them with long-term custodians. They aren’t. Not least because, as long as your assets are with them, they technically don’t even belong to you!
Using a cold-storage solution has never been more important. And in case you’re still not sure why, don’t worry, we’ve got a great article telling you all you need to know.
Banter’s take
We usually think about protecting ourselves from scammers and hackers, but you never know, we may also need to fend off our very own governments as well. And when even the top CEOs are warning you that they are powerless to protect users, it’s time to pay attention!
