Centralised Exchange Tiers

Not All Exchanges Are Equal

A centralised exchange (CEX) is a company that holds crypto on your behalf and lets you trade it. When your coins sit on an exchange, the exchange controls the private keys — the industry phrase is not your keys, not your coins. That makes the exchange a counterparty you are trusting, and exchanges vary enormously in how trustworthy that makes them. The collapses of FTX, Celsius, and others were not abstract risks; they were customers discovering too late that their chosen venue was not what it appeared.

The Signals That Separate Tiers

A few signals do most of the work in placing an exchange. **Regulatory standing**: is it licensed in serious jurisdictions, or operating from an opaque offshore base? **Proof of reserves**: does it publish cryptographic evidence that it holds customer assets? **Insurance and audits**: are customer funds insured, and are financials audited by a real firm? **Track record**: how has it handled stress, outages, and withdrawals? None is a guarantee, but together they distinguish a well-regulated venue from a black box.

• On an exchange, the company holds your keys — it is a counterparty you trust
• Regulatory standing, proof of reserves, insurance, and track record separate the tiers
• FTX and Celsius showed the cost of trusting a brand over the underlying substance
• No signal is a guarantee, but their absence is a warning