It is not your duty to save your favorite exchange!

It has been yet another roller-coaster week for centralized exchanges in the crypto world, and unless you've been living under a rock for the last few weeks or so, you certainly know about the FTX saga and how it has caused many people to doubt basically all centralized exchanges (CEXs) on the planet. The biggest elephant in the room is of course no other than Binance.

Unprecedented amounts of withdrawals left CEXs namely Binance this week, so much so that it hit $3 billion in a single day!
CZ claims that it is normal activity and that the exchange saw heavier withdrawal operations in the past, while many people are wondering about Binance's solvency and its ability to continue delivering user funds.

To someone like myself, who has always been an advocate for self-custody and for people pulling their money out of CEXs, I'm a bit happy seeing some sort of mass exodus off those exchanges.
I understand this is not happening at the most perfect time as we're in a bear market and we don't need another version of the FTX fiasco. However, the thing that surprised me during the past couple of days was the number of people getting so emotional about their favorite exchanges!

It is not our duty:

This is a simple message to those who may think that it is their "duty" to show support for exchanges in their battle to prove solvency. They may keep their funds on their favorite exchange and advise others to do so in order to "protect" those exchanges from bankruptcy. They may even speak up on Twitter about how much they trust Binance, for example, and how impossible for it to go down. To those types of people, I would say this is not your cross to bear… It is not a burden you have to lift!

You simply don’t have to give your coins over to an exchange so it stays in business, and you shouldn’t feel any guilty about withdrawing your funds out of it. Don’t worry about it. If your favorite exchange (be it Binance or whatever) is actually holding your deposit, then it should be just fine.

If an exchange is not doing something funny with user funds, it simply means it will continue to be solvent until the last person withdraws their coins. In other words, if it is running an honest business, it will continue to be in business on its own. If not, then it's better to get rid of it sooner than later, right? It is just simple as that!

Yes, I know exchanges are great for making trades and have done an excellent job onboarding many people into crypto, but please don't think for a moment that it's your role to protect them, it is simply not our duty as users. Once again, it is just not our cross to bear...

FTX, after one or two billion dollars left the exchange, crashed because that’s how little responsible they were. We all know now what they were doing with user funds.

On the other hand, Binance, CoinBase, and others are continuing to do well processing huge withdrawals over the last few days. By doing so, they’re proving their credibility. And for all big exchanges, it is the opportunity to show their strength. It is one hell of a stress test, and those who pass it now will probably be in a great position in the next bull cycle.

Coinbase CEO knows it and he overly urged employees to be prepared to serve customers amid market volatility, stating "this is our moment to shine"

Binance CEO also has a similar narrative as he tweeted:

"I actually think it is a good idea to stress test withdrawals on each CEX on a rotating basis"

Another medium-sized exchange is Paxful whose CEO is messaging customers asking them to literally take their funds off the exchange if they're not trading!
That's right, a CEO is asking his customers to withdraw their funds from his own exchange! Never thought I’d live to see the day!

Kucoin, Kraken, Gate.io, and most other exchanges seem as if they continue to handle user withdraws nicely, which is great, but let's not forget that things move very fast in crypto and what is good today might turn out to be very bad tomorrow. FTX has taught us this lesson the hardest way, so we’ve learned it well.

I’m not here to spread FUD, and I sincerely hope all CEXs survive this bear market as their failure would be no good for crypto, especially during these trying times. However, I wouldn’t be happy to be the victim if the worst comes to the worst at any moment. And I’m not willing to be the one left holding the bag when others start to run.

As users, we deserve the highest level of safety which is, quite honestly, not the case most of the time. I know there are different grades of exchanges and some of them are safer than others, but I think we're at a point where we just have to assume that all exchanges are insolvent unless proven otherwise. So, please, for the love of Satoshi, do the right choice and put your funds into your own custody.
It is not a time to be so loyal to your favorite CEX, it is actually the time to keep calm and bang that old golden drum..."not your keys, not your crypto"...


What do you guys think? Do you have any "loyalty" to an exchange so that you don’t want to withdraw your funds from it? I'm keen to read the comments...

THANK YOU FOR READING

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