Can a crypto exchange take your crypto from you?

Introduction:

No one can take your crypto away from you if you don’t want them to, but there are scenarios where exchanges could try to make this happen.

You need to know what they are so that you can protect yourself and ensure that your hard-earned crypto is always in your control. Find out how crypto exchanges can steal your coins and what you can do about it right here!

Exchanges are centralized

The very nature of exchange means that it’s centralized. That makes them easier to shut down, freeze assets, or impose other restrictions on users. Exchanges also have to comply with local regulations and it can be easy for authorities to restrict access for citizens based in certain jurisdictions or to embargo whole countries. That’s why many people prefer decentralized exchanges over centralized ones—although some platforms offer both options. 

Decentralized exchanges like EtherDelta don’t require users to sign up with personal information and allow peer-to-peer trading without deposits or withdrawals. However, they are less user-friendly than their centralized counterparts. If you’re looking for something more familiar, try out Changelly or ShapeShift. Both allow users to buy cryptocurrency with credit cards and bank transfers. While these services aren’t as anonymous as buying coins through LocalBitcoins, most transactions are still private enough not to worry about being traced back to you by authorities.

If anonymity is key, though, look into using Monero or Zcash instead of Bitcoin since those currencies provide better privacy features than BTC does by default. You should always remember that if you leave money on an exchange then it's not really yours anymore; if anything happens to that platform then your funds could disappear too!

How exchanges can lose access to their funds

If an exchange doesn’t hold enough funds to cover its users’ account balances, it can lose access to those funds if its banking partners refuse to do business with it. It's not uncommon for banks to cut off service without warning because they fear being implicated in illegal activity or because they have lost faith in an exchange after detecting fraudulent behavior.

Customers could be left without access to their money and no way of getting it back; no consumer protection agency will step in and help them. In most cases, customers would need to file a claim against their bank under applicable contract law (which varies by state). The good news is that such situations are extremely rare: since 2012, only one U.S.-based exchange has reported losing control over its own funds—and even then, it was able to recover all customer assets before shutting down.

The point here isn't that exchanges are invincible but rather that they're subject to regulatory oversight and must meet certain security standards before gaining approval from banks to operate accounts on behalf of their customers. This system helps ensure that exchanges are unlikely to disappear overnight with customer assets.

What to do if an exchange loses your cryptocurrency

If an exchange loses your cryptocurrency, it’s probably too late to get it back. That said, there are still some things you can do (and options available) to potentially recoup any lost funds. Let’s look at what those are and how to go about doing them. In general, though, our advice is as follows: Trade on reputable exchanges with high volume. Avoid new or shady exchanges where possible. If things go south on an exchange, try not to panic; instead, start gathering information and find out how best to move forward in getting that money back.

The more prepared you are for these situations, the better off you’ll be when they happen. And if something does happen—and if it happens to be bad enough—you might have legal recourse against that exchange. Of course, all of these things require time and effort, so don't expect instant results.  First, let's talk about what you can do if an exchange doesn't hold up its end of a trade. After all, losing money because of technical issues isn't quite as painful as losing your coins because someone stole them from you.

These days, most trades occur via smart contracts or blockchain-based escrow services like Etherdelta's trade execution service, but that wasn't always true. There was a time when people would simply send their cryptocurrency to an address provided by another person who would then release that currency after receiving payment in return. It sounds easy enough until we factor in human error.

Conclusion

If security is key to your crypto portfolio, then an exchange that’s considered hackproof might be something to consider. However, if security is not as important to you and it doesn’t bother you that there may be some risk involved with keeping your tokens on an exchange, then there are plenty of exchanges to choose from.

If security matters most, here are some exchanges with good reputations for protecting their users' assets.

Coinbase: It has never been hacked since its establishment in 2012 (at least not until 2017 when it was rumored that $4 million was stolen).

Gemini: It has never been hacked since its launch in 2015. Kraken: It hasn't had any major issues yet. The platform also won the Best New Exchange award at BitcoinExpo 2014.

Bittrex: This US-based exchange recently moved off-shore after receiving approval from Belize's government.

HitBTC: The Malta-based platform is known for offering more than 190 cryptocurrencies and has never been hacked before; however, rumors suggest that it did experience internal technical problems earlier in 2018.