With the crypto space rife with uncertainty, it's crucial to take meticulous steps when safeguarding your cryptocurrency.
Storing your digital assets on exchanges often comes with a lack of transparency and potential risks, as you trust others with your assets.
Over the years, there have been calls for Bitcoin holders to keep their assets in self-custody instead of exchanges. This call is once again amplified in response to the FTX collapse.
Similarly, the events in the past few months in the crypto ecosystem have made investors wary of centralized exchanges. There are accusations that many of them are insolvent and running on fractional reserves.
On this premise, Ray Youssef, CEO of Paxful, leads the call for investors not to leave their BTC on exchanges. He said there are better ways to secure your holdings than keeping your Bitcoin and other digital assets on the exchange platform.
Ray Youssef, the CEO of Paxful, tweeted that "he strongly advises people to never keep savings on any exchange." His stance became more intriguing when he mentioned that he does not advise the storage of digital assets on Paxful (too).
Furthermore, many consider the call for investors to save their Bitcoins in self-custody wallets shocking. It is more shocking that he included his (own) exchange, Paxful.
Significantly, he has started sending out emails to users.
The email explains that Paxful protects user funds and won't touch them. However, the advice is to move Bitcoin to self-custody while using the exchange for trading.
Furthermore, he ruled out trust in these exchanges. He said, "the whole point of crypto is that you don't have to trust other people anymore. Crypto was designed to save us from this exact problem—these opaque systems where you don't know what is being done with your money."
However, he bemoaned that these exchanges keep using your "money" with no details of what is happening.
There have been mixed reactions before and after Paxful CEO's announcement. Most industry players strongly advise that digital assets be kept away from exchanges except trading funds.
The lack of transparency is the foremost reason investors are warned not to leave their BTC on exchanges. This became more evident after the FTX filed for bankruptcy and eventually collapsed in November.
The exchange engaged in several insider dealings with Alameda's research without informing the investors. The crash has, however, consumed both the exchange and the investors.
Furthermore, there's a notion that using centralized or decentralized exchange hands over your asset control to the exchanges.
Peter Eberle, president and chief information officer for Castle Funds, said, "You're taking their promise that your bitcoins are there." He added that the exchanges work in "this dark hole where you can't see into it."