I keep seeing reasons to stay away from centralized exchanges.

[Sunshine1525]

In my opinion there is no difference between a fiat bank and a crypto exchange. Neither of them is under our own control and at any time they can freeze our account through regulations.

Since people are mentioning Trust Wallet which is a close source wallet I think this is an advertisement that Binance itself has created so that those who do not want to use Binance use Trust Wallet instead. They want to keep the users trapped within their own ecosystem. why would anyone mention Trust Wallet when there are many better secure open source wallets than this?

It's just a form of partial control by the government cause they can still have access to one's fund through the exchanges. Satoshi created Bitcoin to give us control of our own funds so anyone using exchanges to store their coin is at the risk of either losing it to hackers to exchanges through harsh policies/regulations.

For now I'll only advise people to use open source wallets, it's more secured and can be strengthened with a passphrase for better security, Binance and Trustwallet are owned by same person, moreover Trust Wallet's security is not really strong enough cause it's closed source, although partially open source.

[PremiumcryptoHub]

This person may not fully understand the risks associated with closed source wallets, namely Trust Wallet, because previously we observed that users of this wallet lost almost 7 million dollars worth of cryptocurrency due to a hacked Chrome extension, and the founder of Binance said that the lost money would be returned.

So it's clear that even if this individual uses Trust Wallet, it would cause them even more harm; instead, this person should use a hardware wallet, especially for holding Bitcoin or cryptocurrency. The main point is that we should use exchanges for trading and P2P, which means that our holdings will be safely stored when using non-custodial wallets.

[EL MOHA]

Although, I believe trust wallet is close source but it has a level of decentralized system and individual control. I would prefer hodling coins in TW than CEX. Most people hodling coins in CEX are taking risk and they are mostly traders because they use it for buying and selling.

This is only defendable with the only the fact that with trust wallet you have access to your wallet private key or seed phrase and you are can move the funds just when you wish but aside that let’s talk of the back door danger of what the wallet are doing behind the eyes of everyone you would see that Trust wallet it’s or any closed source wallet are a no place to go. Yes you have your seed phrase with you but there is high possibility that the seed phrase is not exposed to you alone because the wallet developers might also have access to it. Or better still the entropy of your seed phrase might be weak like we saw with Cold card case and with cold source you cannot know that.

So best decision isn’t to pick between the two but rather to ditch the two

[Cookdata]

It's just a form of partial control by the government cause they can still have access to one's fund through the exchanges. Satoshi created Bitcoin to give us control of our own funds so anyone using exchanges to store their coin is at the risk of either losing it to hackers to exchanges through harsh policies/regulations.

For now I'll only advise people to use open source wallets, it's more secured and can be strengthened with a passphrase for better security, Binance and Trustwallet are owned by same person, moreover Trust Wallet's security is not really strong enough cause it's closed source, although partially open source.

I doubt if any exchange will allow that but depend on the source of the money. If a user is suspected by the government, they have to provide a statement by law enforcement like FBI and even if they instruct them that account should be frozen, there must be a court case before they grant them access to that fund. If there is one, they don't have choice but to release the funds to the government.

If you remember when the Nigerian government was fighting Binance, one of the condition they gave them was that they instruct them to build a physical office in Nigeria. They want to have headquarter of freezing and retrieving stolen funds from Binance but they decline.

I know most of use centralized exchange, I have nothing against the use but don't keep funds in there, so many people accounts were close by some exchanges and there is nothing you can do about it.

[Oyoyoma_yu]

There are several reasons why an exchange can frozen one's account, and in most cases it could be when you violate their terms of use, when their there is a suspicion while trying to make use of your exchange or probably when you want to make any changes like maybe change of personal information in your account. Although everyone might not have the same experience at the same time because I have also been using binance exchange for long now but have not witnessed anything of that nature myself. However, keeping a large amount of funds in your cryptocurrency exchange is not advisable because of the risk involved because you can loose your Bitcoin or cryptocurrency asset do the activities of hackers or exchange withdrawing their services from your area.

[Odogwu-Blockchain]

I know most of use centralized exchange, I have nothing against the use but don't keep funds in there, so many people accounts were close by some exchanges and there is nothing you can do about it.

You can't stay away from centralized exchange, it's the bed rock that serves between the digital world and the traditional Fiat nation's world. You stepped into the world of centralized exchange before having crypto and then send to wherever you want.

It's completely understandable that cex has features that are controlled by government but that's the bedrocks, you exchange Fiat to crypto through cex, that's the way I see it.

[Obim34]

You can't stay away from centralized exchange, it's the bed rock that serves between the digital world and the traditional Fiat nation's world. You stepped into the world of centralized exchange before having crypto and then send to wherever you want.

Is centralized exchange a bad development? More than half of investors and traders all make use of centralized exchanges, the question is for what purpose, and why some rely on using it for the wrong reason it was created.

Centralized exchanges are not for long-term storage, they are not even a comfortable place for holding your crypto in the short term. What happens to upholding self-custody after buying and selling? I think some crypto users need orientation on self-custody and why it is necessary.

[Padi24]

I know most of use centralized exchange, I have nothing against the use but don't keep funds in there, so many people accounts were close by some exchanges and there is nothing you can do about it.

You can't stay away from centralized exchange, it's the bed rock that serves between the digital world and the traditional Fiat nation's world. You stepped into the world of centralized exchange before having crypto and then send to wherever you want.

It's completely understandable that cex has features that are controlled by government but that's the bedrocks, you exchange Fiat to crypto through cex, that's the way I see it.

You're absolutely correct @ Odogwu Blockchain, surely there's no how we will avoid using centralized exchange completely when it's through centralized exchange that we make deposit and then send across other wallets. So it's almost impossible to avoid using them, rather we shouldn't HODL our Bitcoin on centralized exchange because holding your Bitcoin investment on centralized exchange is more like giving out your assets to third party to manage or HODL it for you, holding our Bitcoin assets is much more safer when we HODL it on decentralized wallets where only you will have control over your assets.

[Johnlomape]

So this Binance user made a post on Reddit that his Binance account was randomly frozen for as long as 6 weeks after he made a last transaction of just $200. He claimed  that he has been using the Binance service for more than 6 years and never had such experience before.
In his word of regret after his experience he said;
“ I regret believing, don’t trust banks trust crypto”
“I should have used trust wallet instead of Binance”



This is just one of many reasons we discourage the Centralized exchanges even if his account will be unfreeze after they are done with their review, it must have put the user in an uncomfortable situation and there is no freedom here anymore.

I was also caught up by the statement he made which was he should have used trust wallet instead, I don’t think trust wallet wallet is also a safer zone, just because it’s a closed source wallet and it could also be compromised since one cannot review its source code only the team have access to it.

He should have opted for an open source non custodial wallet like sparrow or the Electrum wallet instead.

Link: https://www.reddit.com/r/binance/s/8uORW6zOwd

All exchanges have their rules and when you go against their rule, the exchange can bring down your account or restrict you from using the account. I have seen so several cases where an exchange freezes the account of their users claiming that the funds that entered their accounts were suspicious and needed to be frozen instead of returning the money.

We should use most of the centralized exchanges at our own risk. Accounts are getting frozen everytime based on different reasons and excuses that may look irrational to us. Any coin that is coming from a restricted zone like mixers or blacklisted sources should not be sent to a centralized exchange because it can be frozen forever.

[Samlucky O]

 Of course keeping money in exchange is highest Risk of privacy. People already know the risk involved in using exchange wallet than non custodial wallet but they prefer convenient over privacy, they just need a hot wallet they can just received and sent without the need to to import seed and this is the reason why many fall into exchange trap. Custodial wallet makes your fund completely useless like fiat in the bank, the bank /government have total control of one's fund, it looks like a person having fund in the bank but in crypto currency. Privacy and security should be taken seriously because any exchange can be hacked at any given time and they have the right to give or not given you any dime in in time wallet because you chose convenient over privacy.

[iBaba]

There are several reasons why an exchange can frozen one's account, and in most cases it could be when you violate their terms of use, when their there is a suspicion while trying to make use of your exchange or probably when you want to make any changes like maybe change of personal information in your account. Although everyone might not have the same experience at the same time because I have also been using binance exchange for long now but have not witnessed anything of that nature myself. However, keeping a large amount of funds in your cryptocurrency exchange is not advisable because of the risk involved because you can loose your Bitcoin or cryptocurrency asset do the activities of hackers or exchange withdrawing their services from your area.

One thing I also noticed is that people sometimes become very comfortable with exchanges because they have been using it for years, the problem becomes obvious mostly when something unexpected happens and you need access to your money.

Personally I don’t think I can use exchange as my wallet and put a large amount of bitcoin, I guess they are useful for buying and selling. So keep what you actually need for trading, separate your long term holdings and that will give you another layer of protection. Even if binance has worked perfectly for someone for years I don’t think that can continue always because you should think what would happen if they restrict you from accessing it after putting huge amount.

[gracreavix]

What happened to coldcard should have told us that nothing is 100% secure. So trusting any wallet 100% is dangerous. Just because is open source and the public can see the code for vulnerability and patch is faster. Doesn't mean it is very secured from hack. Yes it is much better than any other wallet that is closed source. But still what happened recently should tell us that nothing is 100% secured.

[Jubilee58]

Decentralized exchanges should not be used for your Bitcoin investment or use it to keep big amount of money. When I started cryptocurrency investing, I have lost my fund to many exchanges that later withdrew their services form Nigeria such as OKX exchange, and Hotbit exchange, and sometimes there are other issues that could arise that will still jeopardize your investment. Many times, as we read through the news online, we do hear the story how exchanges are hacked, and how they have lost huge fund to scammers, with these kind of stories, Bitcoin investors or other cryptocurrency investors need to be very careful on how they should make use of cryptocurrency exchanges.

So far Bitcoin, and other cryptocurrencies exist, we cannot entirely rule off the the use of  cryptocurrency exchanges, as it is used for cryptocurrency trading, and little funds can equally be left there, but the storage of large Bitcoin assets should be avoided.

[Son Of Blockchain (SOB)]

Decentralized exchanges should not be used for your Bitcoin investment or use it to keep big amount of money. When I started cryptocurrency investing, I have lost my fund to many exchanges that later withdrew their services form Nigeria such as OKX exchange, and Hotbit exchange, and sometimes there are other issues that could arise that will still jeopardize your investment. Many times, as we read through the news online, we do hear the story how exchanges are hacked, and how they have lost huge fund to scammers, with these kind of stories, Bitcoin investors or other cryptocurrency investors need to be very careful on how they should make use of cryptocurrency exchanges.

So far Bitcoin, and other cryptocurrencies exist, we cannot entirely rule off the the use of  cryptocurrency exchanges, as it is used for cryptocurrency trading, and little funds can equally be left there, but the storage of large Bitcoin assets should be avoided.

Long-term investors should always go for wallets that guarantees self custody, the wallet the OP talked about is a centralized exchanges and gives access to a third-party which is the owners of the exchange and asides that they barely have very strong security and users can lose their fund due to policies and cases whereby they shutdown like it happened to you.
 Yeah exchanges are important in terms of trading or withdrawal of some portions of your investment to sell off in P2P but not for those who wants to store their asset, long-term holders should use wallets that are open source.

[Y3shot]

In a centralized wallet, anything can happen: not your keys, not your coins. Some people feel very comfortable keeping their assets on an exchange because the exchange they choose is a popular one. Using one of the big exchanges or a popular exchange does not make your assets safe. Big exchanges can go bankrupt, they can still be hacked, and being big doesn't mean they are free from scammers.

People need to understand the main reason why they need an exchange and also understand why they need a non-custodial wallet for holding. There are many reasons why exchanges are not a good place to keep assets. The exchange controls and owns your assets because they have your keys.

[Davidvictorson]

~…~

Well, he may have transacted with a flagged address
My issue with these exchanges is that they will just be so vague in their reasons and then set themselves up for drags.
On the other hand, treat centralized exchanges as a market place where you go and buy and sell but do not leave your money there. That was how someone put it some time ago.
Good lesson learned.

[Proty]

I had similar experience in the past while using kucoin . I was suspended from making withdrawal and I had to contact there customers service. It was really a frustrating experience, although I was later asked to withdraw all my assets that the account will be frozen due to some reason that they stipulated. The thing is just to avoid using centralised exchange for keeping assets,  especially for a long term , because there we don't have control of our assets.  I believe there maybe reason why the account was freaze, probably due to security issues , but locking it for like six weeks is going to be challenging for the owner.

[CryptSafe]

This is one problem with centralised exchange. They can freeze account at any time and St their will and there is nothing one can do about it. CEX is more like the government arm of Crypto organisation operated by individuals  who were granted permission to do so hence they are being guided by the government policies and regulations while operating.
This is why we have to keep our assets under our own custody and not exchange because keeping it with exchange does not guaranteed  any safety as we thought, we should  try remove all digital assets from third party exchange and keep them safe in our own personal wallet as that would help reduce the risks involved.

[JimaGod]

I had similar experience in the past while using kucoin . I was suspended from making withdrawal and I had to contact there customers service. It was really a frustrating experience, although I was later asked to withdraw all my assets that the account will be frozen due to some reason that they stipulated. The thing is just to avoid using centralised exchange for keeping assets,  especially for a long term , because there we don't have control of our assets.  I believe there maybe reason why the account was freaze, probably due to security issues , but locking it for like six weeks is going to be challenging for the owner.

Accounts getting frozen is really not helping and I can imagine the frustration on the faces of the victims because it never funny especially when the money in question is regarded as emergency fund, what will be your next step if your money got freezed? This totally explains one of the good reasons why I would always choose to use self custodian wallet because it gives you full control over your wallet and secondary party is been initiated. We should be more recognizeable and knowing exactly what we want in the system.

Wait mate, you said six weeks? That's extremely waste of time because how can one wait for six weeks just to withdraw his or her funds? 4 weeks makes one month and it means we would wait more than 30 days before we can get to finalized anything holding us back and we take full accountability for misdirection or anything that happens to us when we're practicing self custody of our coins.

[CryptopreneurBrainboss]

This is just one of many reasons we discourage the Centralized exchanges even if his account will be unfreeze after they are done with their review, it must have put the user in an uncomfortable situation and there is no freedom here anymore.

It takes just few minutes for them to see reasons why we have been advising them not to trust centralized exchange's, we'll still have people that won't hear untill they have their own experience so I'm not surprised reading threads like this because we'll keep having them in future as more people come to realization of why CEX aren't to be trusted. It doesn't matter how long you've been using them, when it's your turn to expeimce your freedom been taken from you, you'll experience it and if you have been using them as where you keep your crypto then be ready to be filled with regrets. Use exchanges for what they were built for and nothing else because you don't know what they have in plans for you. Only keep your Bitcoin in wallets that you have control over your seed phrase and nobody can decide if you get access to your coins or not. We can't be escaping from the banks and being met with the same treatment because we trust CRX or centralized wallets.