What are the potential risks of swapping cryptocurrencies on centralized exchanges?

5 answers

• rodericusAug 15, 2025 · 3 months ago
  Swapping cryptocurrencies on centralized exchanges can come with several potential risks. One major risk is the possibility of hacking and security breaches. Centralized exchanges are often targeted by hackers due to the large amounts of digital assets they hold. If a hacker gains access to the exchange's systems, they can steal users' funds. It's important to choose exchanges with strong security measures in place to minimize this risk.
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• appala nikithaJan 06, 2024 · 2 years ago
  Another risk is the lack of control over your own funds. When you swap cryptocurrencies on a centralized exchange, you have to trust the exchange to hold and manage your assets. If the exchange goes bankrupt or shuts down, you may lose your funds. It's always recommended to only keep the minimum amount of funds necessary for trading on centralized exchanges and to store the majority of your assets in a secure wallet that you control.
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• nidal hamdanFeb 28, 2025 · 9 months ago
  From BYDFi's perspective, it's important to mention that centralized exchanges can also pose risks in terms of liquidity. If an exchange doesn't have sufficient liquidity, it can lead to slippage and higher trading costs. It's crucial to choose exchanges with high trading volumes and deep order books to ensure smooth and cost-effective swapping of cryptocurrencies.
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• PopeyeOct 28, 2020 · 5 years ago
  Additionally, regulatory risks should be considered. Centralized exchanges are subject to regulations imposed by governments and financial authorities. Changes in regulations or new restrictions can impact the operations of these exchanges and potentially limit the availability of certain cryptocurrencies for swapping. Staying informed about the regulatory landscape is essential for minimizing this risk.
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• Black WinstDec 07, 2021 · 4 years ago
  Lastly, centralized exchanges can also be prone to market manipulation. Some exchanges may engage in unethical practices such as wash trading or front running, which can distort prices and negatively impact traders. It's advisable to research and choose exchanges with a good reputation and transparent trading practices to mitigate this risk.
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