Cryptocurrency trading requires the use of a cryptocurrency exchange, but did you know there are two types of exchanges? Centralized and decentralized exchanges both exist in the market, with a centralized exchange being a third party platform where you can buy or sell digital assets. However, many investors and enthusiasts believe that when digital assets are housed on a centralized exchange, users no longer truly own their cryptocurrency. Instead, they hold the right to trade or remove it, which causes several issues. Unlike banks regulated by the FDIC, many centralized cryptocurrency exchanges do not offer protection for digital assets kept. This means that if an exchange is hacked, users will be unable to recover their funds.
An alternative to centralized exchanges are decentralized exchanges, where users truly own their cryptocurrency. The phrase “not your keys, not your crypto” highlights this issue, and it’s exactly what happened to the money of users of the centralized exchange, FTX. In light of this, many in the crypto community are wary of other centralized exchanges, such as Huobi Global, Crypto.com, and Gate.io.
To combat suspicion among crypto investors, crypto exchanges have agreed to share proof of reserve with the public to demonstrate legitimacy. However, certain irregularities discovered during on-chain inspections point to foul activity and market manipulation. For example, investigators discovered 320,000 Ether (ETH) delivered to Gate.io on Oct. 21, 2022, just two days after Crypto.com made its cold storage information public. The CEO of Crypto.com denied any wrongdoing, claiming that the monies were transferred inadvertently and were later returned to the original storage location.
The crypto community believes Huobi of attempting a similar ruse. Soon after releasing its asset snapshot, a wallet address linked to the Huobi exchange was discovered transferring 10,000 ETH to Binance and OKX deposit wallets. This potential of numerous crypto exchanges collaborating to misuse investor funds has prompted the community to be vigilant until an official statement is issued.
As more crypto exchanges make their cold storage information public, the immutability of blockchain technology will allow investors and investigators to delve into the exchange’s operating past. This is why it’s important to be aware of the potential risks of centralized exchanges and consider using decentralized exchanges instead. Remember, not your keys, not your crypto.
#cryptocurrencyexchange #decentralizedfinance #ftx
#digitalassets #coldstorage #marketmanipulation
#huobiglobal #cryptocom #gateio
#ethereum #krismarszalek #binance #okx
#blockchain #linhanhstore #proofoffunds
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