Treat all exchanges like a public bathroom. Go in, do your business, and get out ASAP.

I saw this comment the other day on a post regarding to the SEC’s enforcement action against Kraken. It’s such a good mindset to avoid getting burned. I’ve more or less applied it throughout my time in this space, and I never have and never will worry about an exchange failure.

This is despite exclusively using Binance US (which no longer allows fiat on/off) and Gemini (whose Earn program lost over $1B in user deposits). Would’ve been fine had I used FTX.

Use a tight DCA schedule and withdraw your crypto to cold storage as soon as you’re allowed. Getting tagged for one DCA deposit is manageable. Getting taken for your entire stack is devastating. When it’s time for you to sell, check to make sure there’s no recent FUD with your exchange, then set a limit order within pennies of the market price and withdraw immediately when it’s fulfilled. Any exchange that doesn’t perform instant or next-business day ACH fiat withdrawals is not worth transacting with.

Beyond the risks to your hard-earned assets, keeping your coins on an exchange defeats the purpose of holding crypto. Until we see mass adoption, crypto’s best use case is as a decentralized store of value that is resistant to monetary and market manipulation. Leaving your coins on an exchange allows a centralized entity to play games with your assets, potentially losing them in the process.

Coinbase and Kraken may be touted as honest, well-regulated exchanges. Doubt it. But even if we assume these billion dollar entities are operating with our interests in mind (lol), what happens if they get hit with arbitrary fines so extraordinary, they don’t have the cash on hand to pay them? Congratulations, your assets will be liquidated to fulfill their obligations. Please ask the former patrons of FTX, BlockFi, Voyager, Celcius, or Genesis if they enjoy being creditors in bankruptcy proceedings.

All exchanges are shady to varying degrees. They are not your friends. They deserve to be treated like public bathrooms. Go in, do your business, and get out.