Not your keys not your coins for traders

[Oshosondy]

Even when the incident happens once a year, it is never ideal to store funds on exchanges for the long term, even if the funds are split into many exchanges, and I don't see any reason why it will save anyone from a sudden exchange hack unless you're referring to it minimizing the amount of crypto people will lose through the hack.

If you split the money on exchanges, it is better. Also this is not about holding, it is about trading funds. People should be able to differentiate between that. If I have 100% money, 10 to 30% go into trading. The 10 to 30% splitted into 3 to 5 exchanges. The trading fund on the exchanges are lower. Another thing is that it is good to use exchanges that have protection fund.

[Texac]

With centralized exchanges, there are some biggest risks.

Hacks.
Scam exits.
Bankruptcies.

Among these three biggest risks, I consider scam exit is most dangerous because with this exchange death type, users will surely lose all money. With hacks and bankruptcies, it is case by case, and users will still have chance of getting their fund back, fully or partially.

Yah, exit scams are probably the biggest risk when holding fund on CEX. But with government stepping in heavier and regulation tightening up, I reckon those exit scam will fade out pretty soon.

Just this year alone, 3 exchange have shutdown, 1 got hacked. But most of them gave clear announcement and specific instruction to their users. None of them just pulled the plug and ran off with customer money.

Imagine what happens once full on crypto laws get passed and enforced? Doubt anyone is keen on doing jail time LOL.

After I trade and make a profit, I usually immediately withdraw the money to my personal account, leaving only a small amount for the next trade. So, basically, my capital is safe and I've made a profit too.

It's your good practice even it costs you more in withdrawal fees and on chain transaction fees for deposits to exchange accounts.

That's actually a good habit, but how many traders are really making a profit and discipline to pull their money back to their wallet after every win? Kinda doubtful, ngl.

[EL MOHA]

If you split the money on exchanges, it is better. Also this is not about holding, it is about trading funds. People should be able to differentiate between that. If I have 100% money, 10 to 30% go into trading. The 10 to 30% splitted into 3 to 5 exchanges. The trading fund on the exchanges are lower. Another thing is that it is good to use exchanges that have protection fund.

This is one practice that I will say I recommend, leave off your little amount splitted in two to many exchanges at a time and the exchanges are reputable ones because we all know that almost all of them now says they have protection funds or SAFU as others called it. The probability that all exchanges will be all hacked one day is definitely slim and that means there is an iota of chance you’re losing just small if one exchanges actually goes down. The only problem is that most traders are usually fond of using one or two exchanges probably because of their features and this limits them to not been able to split their funds enough into exchanges.

That's actually a good habit, but how many traders are really making a profit and discipline to pull their money back to their wallet after every win? Kinda doubtful, ngl.

The idea is actually not leaving off big amounts on exchanges so a withdrawal after a profitable trade or series of trades might be because the profit is big that trader cannot afford to lose and this huge wins isn’t common just everyday, so the move cannot be everyday or after every trade

[Catenaccio]

If you split the money on exchanges, it is better. Also this is not about holding, it is about trading funds. People should be able to differentiate between that. If I have 100% money, 10 to 30% go into trading. The 10 to 30% splitted into 3 to 5 exchanges. The trading fund on the exchanges are lower. Another thing is that it is good to use exchanges that have protection fund.

I don't split it like this and I split my trading capital to 5 or 10 parts, then use each part as my trading capital, and I save the remaining parts for later use. Because I understand risk of trading, and I reserve 9 remaining parts for using if I lose all money with my first trading capital part. Split it to 10 parts will give me 10 times of learning about trading, practicing trading, and repeating it again and again.

This is one practice that I will say I recommend, leave off your little amount splitted in two to many exchanges at a time and the exchanges are reputable ones because we all know that almost all of them now says they have protection funds or SAFU as others called it. The probability that all exchanges will be all hacked one day is definitely slim and that means there is an iota of chance you’re losing just small if one exchanges actually goes down. The only problem is that most traders are usually fond of using one or two exchanges probably because of their features and this limits them to not been able to split their funds enough into exchanges.

I can split funds on two or three exchanges but only split it from each part of my trading capital as said in reply to Oshosondy above. Storing funds on exchanges is never SAFU. Trading is risky, not SAFU. Combining them means a lot of risk with trading on any exchange.

[Just Say]

Bitget's experience is another recent hack that should teach us a lesson for those who are used to using a centralized exchange for trading: don't keep all your trading funds on an exchange; the risk may be too high for you to be on their side with all your trading capital because you can't predict what may happen in the near future with any centralized exchange. Not your keys, not your coins still remain ever relevant.

Yes Bitget hacking incident is another experience for us so learn from it and don't keep all funds in centralized exchange for trading as many exchanges have been hacked in past. Actually traders should be aware that they should only use this exchange for doing p2p or trading and in my opinion the profit earned from trading or funds should not be stored there for long term.

Non-custodial wallets should be used for holding Bitcoin or other cryptocurrencies to reduce the risk of losing large sums of money to the exchange during hacking, as the advantage of this wallet is that you will have complete control over your funds and privacy or security will be maintained so that hackers cannot hack an investor's Bitcoins by hacking the central server, thereby keeping the holdings safe.

[BitBakerr1]

Bitget's experience is another recent hack that should teach us a lesson for those who are used to using a centralized exchange for trading: don't keep all your trading funds on an exchange; the risk may be too high for you to be on their side with all your trading capital because you can't predict what may happen in the near future with any centralized exchange. Not your keys, not your coins still remain ever relevant.

Yes Bitget hacking incident is another experience for us so learn from it and don't keep all funds in centralized exchange for trading as many exchanges have been hacked in past. Actually traders should be aware that they should only use this exchange for doing p2p or trading and in my opinion the profit earned from trading or funds should not be stored there for long term.

Even before the Bitget hack happened, we have heard about other exchange hacks that happened, and I believe everyone has already known the risk in keeping your crypto coin in an exchange for a very long time.
I agree with you, as a trader after trading what you should do is to remove all the money or all the crypto coin in your exchange and move it to your wallet if you don’t want to run P2P that will change it to your currency, keeping it in your exchange is very risky because anything can happen like they say not your key not your coin, this applies to traders too.
Traders use exchange to trade but don’t keep your coin there too long.

[henmark]

if you don’t leave your money in an exchange, you won’t have any problem with the exchange being hacked.
When you are done for the day, the next thing you should do is to withdraw all the money that is left in that exchange so you won’t fall into a situation of losing your money.

It is called as exchange for a reason. People should only use it to exchange. Then on the other, there is also called as wallet. We already know what is it. This is where we should store our money by the time we are done trading. If we think we will use the exchange again, then withdrawing all is not a wise thing to do. We should only withdraw our profits and leave the same capital we use last time.

But talking about hack, I have not actually seen a situation where a hack happens to an exchange and the exchange totally close down and customers loses their money, it may have happened but I have not actually seen.

You have not seen one but have you heard any? Me, I have not not seen an actual event but I do hear a couple of it already. I think one example is Mt.Gox. It is an old exchange. The reason may be for the shut down, is that the damage is way too big. It must only be understood, since the security before is not that tight as of today.

[Hamza2424]

That was what I thought after reading the entire post. He was lucky because in a situation like this, it could have been any exchange. I think he already made mention of that on a part of post here, but what he said right after that made it look more like he was expecting the hack which doesn't make any sense.

Perhaps he's not after the extra benefits but having less exposure and not losing everything in a situation where a hack ocurrs. The latter fulfils that process for him.

No one knows which exchange will be next, and no one knew about Bitget too. He predicted that, and he took early precautions, so whenever something like this happens, he will be safe. But if he was using Bitget, then he won't be.

Although I heard Bitget is resuming withdrawals, so everyone will be able to withdraw their funds if they want to. But we should understand one thing, we should only hold funds in exchanges that have enough SAFU funds for what they are controlling. Unlike Bitget, they are responsible for more than they have in SAFU.

[suzanne5223]

Even when the incident happens once a year, it is never ideal to store funds on exchanges for the long term, even if the funds are split into many exchanges, and I don't see any reason why it will save anyone from a sudden exchange hack unless you're referring to it minimizing the amount of crypto people will lose through the hack.

If you split the money on exchanges, it is better. Also this is not about holding, it is about trading funds. People should be able to differentiate between that. If I have 100% money, 10 to 30% go into trading. The 10 to 30% splitted into 3 to 5 exchanges. The trading fund on the exchanges are lower. Another thing is that it is good to use exchanges that have protection fund.

Now I understand your stance about the split of funds in different trading platforms.
I made the previous statement because the previous user never said anything about the fund being used mainly for trading purposes.
If that's the case, then everything said about splitting funds is good, but we shouldn't just use exchanges that use only words to claim they implemented user fund protection.

[Tamaperdana]

After I trade and make a profit, I usually immediately withdraw the money to my personal account, leaving only a small amount for the next trade. So, basically, my capital is safe and I've made a profit too.

It's your good practice even it costs you more in withdrawal fees and on chain transaction fees for deposits to exchange accounts.

Yes, although it's true that I pay quite a lot in fees when calculated, as long as it's still balanced and I'm still making a profit, I won't worry about it. Because basically, the security of my money is more important than the withdrawal fees. Besides, I also often use the P2P feature, so yes, it just feels cheaper, in my opinion, when withdrawing money. So far, I'm comfortable with what I'm doing, and it will probably continue to be like this. But of course, everyone with different financial situations has different strategies regarding this. Because basically, your strategy will certainly not be the same. So, yes, no matter what strategy is, the most important thing is that our money is safe, and we must not be exposed to fraud or hacking while on the exchange. Because obviously, if that happens and our money becomes a victim, it will clearly be a huge blow. So, the point is, we just have to be careful and not be reckless.

[shinratensei_]

Can't deny Hyperliquid and some other perp DEXs are creating some real competition for CEXs.

But using a DEX doesn't make risks disappear. You're just swapping one type of risk for another. With DEXs, you still have smart contract bugs, bridge risks, oracle manipulation, or worse, a leaked private key. And if you lose your money because of any of that. There is pretty much nobody to compensate you or help get it back.

CEXs still have their own advantages, like deeper liquidity and way more trading pairs. Their service are also a lot more diverse. It's not just spot and perps.

DEX are giving people another option. But they do not remove the risks and make CEX outdated.

Good point, I agree with the smart contract exploit, hacking, etc. But I don't agree with the oracle risk, hyperliquid or maybe other Perp Dexs use weighted median mechanism for their price scraping or feed from multiple CEXs market, hence it should be safer than CEX that use their spot price as sole price feed except in systemic market crash, cmiiw. As for the risk of contract bugs, and others. Yeah they exist, but I withdrawn my money frequently after i'm done with the trade, so my money is going back to my own wallet, which mean the risk only exist when i'm trading and I do this a lot because withdrawing from Perp Dexs is easy, though I know you can do the same with CEX. As for private key leak, never a problem for me, never got leaked or anything because I have the discipline of self custody. Well, it's a trade off I'm willing to make.

[TedMosby]

I don't want to comment on your trading strategy of using 3X leverage when you split your funds across 3 different exchanges. I'm more interested in addressing how we can minimize the risk of becoming a victim of a hack that happens to the exchanges we use.

IMO, the phrase "not your keys, not your coins" is not relevant anymore when we are traders who use CEX regularly. It feels like we can't do anything about the hack. It begins with trust, so in that kind of situation you also need to trust the exchange to handle it

What you did may sound right, and I also did the same because I don't want to put all my eggs in the same basket. But, diversifying our funds across several exchanges also indirectly opens up a higher chance for you to become a victim. Assuming all exchanges have the same level of security, if there are 10 exchanges out there, and you only use 1 of them, then your chance of being a victim is only 1/10. If you use 3 different exchanges, then your chance is higher, 3/10.

Diversification -> Mathematically higher chance of getting hit by a hack, but the good thing is you won't lose all your funds, unless all those 3 exchanges get hacked at the same time. Using only 1 exchange -> Mathematically lower chance of getting hit by a hack, but once the exchange you use gets hacked, you may lose all your funds.

Speaking from experience, I had a relatively good experience with exchanges that got hacked. 2 out of 3 main exchanges that I use got hacked before. All of them were able to recover and run their businesses normally again in a short time. Funds were safe and I am still using them, except one that will stop operating soon, CoinEx. For CoinEx, they seem to be a tough exchange. They got banned and fined by the US, got hacked, got FUD because they allegedly became Iran's gateway, etc. But they could still operate normally until (I guess) they eventually got hit by MiCA.

Until now, I still don't know how to be worry free about potential exchange hacks. We may be able to monitor X to get the latest updates about potential exchange hacks, we may limit the funds we keep on exchanges, we may split our funds across several exchanges, we may withdraw funds periodically, we may only deposit when we really need to trade, but still, hacks can happen anytime, anywhere, and make us the victim. It's something that we can't control as traders who trade on CEX.

[masulum]

Until now, I still don't know how to be worry free about potential exchange hacks. We may be able to monitor X to get the latest updates about potential exchange hacks, we may limit the funds we keep on exchanges, we may split our funds across several exchanges, we may withdraw funds periodically, we may only deposit when we really need to trade, but still, hacks can happen anytime, anywhere, and make us the victim. It's something that we can't control as traders who trade on CEX.

well, limit money on exchange can be the right decision, because once we made a deposit to exchange, we must be prepared for the risk of hacking or account being freeze.  we all know once assets on exchange, we no longer have full control over those assets. We can’t simply transfer the assets elsewhere to avoid an attack, because access to those assets is controlled by the exchange system. Even if we become aware of an attack early on, there may no ways for us take to secure the assets.

Following exchange official accounts maybe useful, for staying informed about incident updates, service status, or any update about their process during/after attack. However, this information does not give us control to the assets on the platform. If assets have already been affected by an attack, the issue focused not just about how to secure your account to who take responsible for the lost assets? will users receive 100% compensation from the exchange, or do the exchange policies risk causing users a second loss?

of course reputable exchange maybe able to give 100% compensations for user that affected losses from hacking. that why using reputable exchange even not guarantee free from hacking, at least they are more prepared for their system security.

[OcTradism]

well, limit money on exchange can be the right decision, because once we made a deposit to exchange, we must be prepared for the risk of hacking or account being freeze.  we all know once assets on exchange, we no longer have full control over those assets. We can’t simply transfer the assets elsewhere to avoid an attack, because access to those assets is controlled by the exchange system. Even if we become aware of an attack early on, there may no ways for us take to secure the assets.

Assuming like we will have risk of losing fund sent to exchanges anytime, even very quickly after funding our account, we must never send big fund there, or send all of our money there.

Hacks from exchanges to user accounts and fund stolen to actions of freezing user accounts and funds from exchanges are some of risks. Unfortunately, as users we don't control any of these things, and are very dependent on exchanges after sending fund there.

Warnings are repeatedly given many times and with many resources, like this one in the Bitcoin forum.
Reminder: do not keep your money in online accounts

[Hyphen(-)]

These are the ways I have reduced the probability of losing too much money on exchanges. I want to see your own opinions of what you are doing to reduce the chance of losing too much money on exchanges during hack.

What if it is the exchange with the biggest amount of money got hacked, you will still lose but it will not be as much as people that uses only one exchange and leave their money in the exchange instead of sending some out to their wallets after trading, they will regret if the exchange they are using got hacked and their money was gone.

Nevertheless, separating your money across all exchanges is good you will have options to use as many exchanges as possible to trade and using these exchanges will help reduce the risk, and you can use both to trade using any leverage of your choice, you can as well trade the same coins on two or three exchanges in order to maximize your profit if you sight the signal on them.

[Lida93]

I don't trade grid, I trade futures and sometimes spot; so...I really don't like diversifying the trading platform I use.

Grid trading is just a trading strategy, you can use it for both spot and future trading or use it for any of them. It is not a among the types of trading.

I really don't like using grid trading as a trading strategy and for any trader who have used it before they would understand why. You would dislike grid trading if the market has ever gone in a straight direction while you keep buying in range. Imho, it really not recommendable for futures trades because under such situation the trader could be losing too much.

And as for using many exchanges, I really don't see why since they all standing on similar risk ita better to hang on with at most two reputable exchanges that you're confident of their capability to refund customers should their be a hack on their platform.

[Oshosondy]

I really don't like using grid trading as a trading strategy and for any trader who have used it before they would understand why. You would dislike grid trading if the market has ever gone in a straight direction while you keep buying in range. Imho, it really not recommendable for futures trades because under such situation the trader could be losing too much.

Traders should use the strategy that work good for them. There are many trading strategies that traders are using. Grid trading work well for me as long as I am not greedy and starting small and also knowing when to leave the market.

And as for using many exchanges, I really don't see why since they all standing on similar risk ita better to hang on with at most two reputable exchanges that you're confident of their capability to refund customers should their be a hack on their platform.

Two exchanges are still also good than leaving the coins one a single exchange except you prefer to withdraw the coins immediately you finish trading.

[fullhdpixel]

I only used one back then, but I learned a lot from this forum. I appreciate all members who shared their experience and gave their tips on how we can secure our own money.

Anyway, now I use 4: 2 KYC and 2 non-KYC. I don't trade that much anymore because I really don't have enough time for it. I know how demanding of time trading can be, especially if you do not have the tools to make it easier. Also, I was not that profitable back then, so I thought it was not for me.
Today, there's only a bunch of cryptocurrencies left on one of those trading platforms that I use, and I don't actually use it. Just waiting for the right time to sell, and then I will probably withdraw it.

I would say you made the right decision by not sticking to trading only to earn a living. Seems like you are still in the learning phase and losses are inevitable. Those losses are only going to teach you further but you should be prepared to face those loss. A common human tendency is that once they face loss, they would try and avoid that situation again. A few traders remain consistent and keeps practising and that is what makes them successful.

To me, it seems like you are more of an investor rather than trader. You still have some holding but you do not actively trade so your holdings are somewhat more secure. I am sure you might blow up that money if you bring it in the trading markets so it is better you keep it as is.

[Webutxo]

What if it is the exchange with the biggest amount of money got hacked, you will still lose but it will not be as much as people that uses only one exchange and leave their money in the exchange instead of sending some out to their wallets after trading, they will regret if the exchange they are using got hacked and their money was gone.

Nevertheless, separating your money across all exchanges is good you will have options to use as many exchanges as possible to trade and using these exchanges will help reduce the risk, and you can use both to trade using any leverage of your choice, you can as well trade the same coins on two or three exchanges in order to maximize your profit if you sight the signal on them.

If you are trader, it's very important to separate your funds to different exchanges but when you want to select an exchange, put money in where reserve is proven to be there and if there is insurance like Bitget did the other day when the the exchange was hack. If you make deposits on some exchange and keep it there for trading and something happen to their hot wallet, there is nothing you can do about it to get back your money, some people are still struggling on Bitmart and they are not even hack.

As trader, you must be ready to take risk of leaving your money on exchanges if you have a position open in there and when you are not doing anything, take your money from the exchange and take it to your personal wallet. Although, some people recommend that some Dexes experience are good but I am not familiar with them too much like centralized exchanges.

[TheUltraElite]

Keeping track of that many exchanges is the only fuss I see.

Even in spot trading you have to commit the money to the order even if takes months to actually execute at the set price. In between a hack and wipe out that money. Hence number of open trades should be minimized for spot trading.

Even bad is the habit that quite a few people use the exchange as a storage wallet. Which is the biggest victimization of traders during a hack.