Account bans, locks, and shutdowns are nothing new, especially for high-volume traders and big bag holders. It’s not uncommon for users of top exchanges like Binance, Gemini, Kraken, and more to lose hundreds of thousands of crypto and USD due to account bans, trading limits, account freezes, and more.
What’s worse, the closed-loop of support tickets and bots makes getting ahold of an actual human being virtually impossible – and on purpose, too.
And it’s not just frozen accounts, it’s also the not-so-uncommon exchange hacks that have users wary of losing funds.
But first, what is a custodial exchange? How do they differ from non-custodial exchanges? Which is better?
What are custodial exchanges?
Custodial exchanges are trading platforms that require the use of hot wallets to operate on their platform. After transferring crypto (or USD) to the exchange’s wallet, you’ll be able to trade, but only within their network. Transactions are not recorded on the blockchain until coins are transferred back to the user’s private wallet. The most popular centralized exchanges are custodial exchanges.
Keeping funds in an exchange wallet brings with it enormous counterparty risk, and users are largely expected to trust these exchanges – which are centralized entities – with their funds. Not only are they centralized, but exchange hacks are also fairly common, and they can be a huge risk for users of the exchange. While some exchanges do offer a protection program in the event of a hack, many don’t, and a closed-loop of endless customer support tickets can leave users without help or even answers.
Also, these exchanges aren’t as accommodating to large account holders as you’d expect. Daily trade limits, long onboarding processes, slippage due to a lack of liquidity, account bans, freezes, and more – trading with a lot of cryptos certainly has its downsides on custodial exchanges. Not to mention allegations of crypto exchanges and service providers locking accounts – and with it, user funds – intentionally as a form of “risk management”. Some of the most popular exchanges in use today have been accused of such shady dealings.
Why high-volume traders inherently contradict traditional exchange infrastructure
Low daily trading limits, long and drawn-out onboarding process, account freezes, bans, poor customer support – these are just some of the many problems that high-volume and large account holders inherently face on custodial exchanges.
For high-volume traders living in the U.S., using these exchanges via a VPN is a ticking time bomb. It’s not just U.S. traders facing problems, either. Those living outside of the U.S. who deal with the same major exchanges allege an even worse experience.
Many exchanges have turned out to be exit scams. Turkey, for example, recently banned crypto trading. The fallout in which resulted in exchanges like Thodex leaving the country, and with it, all user funds. While founder Faruk Fatih Özer has reassured the public that he merely left the country for a business meeting (as of the time of this writing) users’ funds had been locked for weeks.
Scams like this aren’t exactly unheard of either, and they can become particularly dicey for those who have hundreds of thousands worth of crypto held on centralized hot wallets. From hacks to legislation and account bans, high-volume traders are inherently at a higher risk of losing more money than the average trader.
Large account holders are also often locked out of their accounts, seemingly to protect the exchange itself. Withdrawal of a user’s funds can theoretically posit negative consequences for the exchange, and it appears they are doing everything they can to keep big accounts on their platform. Users have noted that while the purchase button is available, the withdrawal button is greyed out and unclickable. This is, alleged by a resistance group of locked account holders, by design.
What are non-custodial exchanges?
Non-custodial exchanges are exchanges that don’t require you to use their wallet. Instead, they feature the capacity to link private wallets to their platform. Since your funds aren’t being held on their network, security risks like hacks are no longer an issue. Also, because your funds are stored on a private device that only you have access to, exchanges are no longer able to lock you out of your own account — eliminating counterparty risk.
Non-custodial exchanges solve many of the problems centralized exchanges have, but not all of them. A lack of real customer service, endless ticket loops, and a lack of access to a human when a user needs help can still cause problems for traders of non-custodial exchanges. Combine that with generally low liquidity and a poor UI – it becomes evident why 99% of all crypto transactions are still happening on centralized, custodial exchanges.
Luckily, there is an exchange that solves these problems without compromising security and privacy. Enter: Cryptospace.
Why Cryptospace is essential for high-volume traders
Cryptospace is a non-custodial exchange whose main focus is the high-volume trader. Offering extensive, white-glove customer service and account management resources, traders never have to feel closed off from help. We also understand that your privacy is important, and as a non-custodial exchange, users are completely protected from network attacks.
Cryptospace doesn’t limit trades by any dollar amount, and trades are made directly with us. With Cryptospace, you’re able to link your private wallet to our exchange, fund a USD account, submit orders for instant execution, track your private wallet balance through the platform, and more.
Cryptospace isn’t just for high-volume traders that face heightened levels of counterparty risk, average traders can also benefit. By avoiding exchange hacks and lackluster customer service systems – all of which are rampant on traditional centralized exchanges – everyone can feel safe, helped, private, and empowered.
An emphasis on security
One of the major points of cryptocurrency and blockchain technology was to eradicate the third party, as Satoshi Nakamoto had seen first hand what role banks played in the economic collapse of 2008. The goal was a decentralized currency and ledger system in which people could buy without a third party. The cryptocurrency space has become, in many ways, the opposite of what it was originally intended as. Popular traditional exchanges like Binance, Krakken, Gemini, and more swooped in without paying any mind to the original message of cryptocurrency.
At the end of the day, if it isn’t your keys, it isn’t your crypto.
Every transaction made within a centralized exchange is just numbers on a spreadsheet. You’re only really buying crypto when you withdraw your funds back into your bank account or private wallet since transactions made on hot wallets aren’t recorded until they’re off-platform.
With Cryptospace, you don’t need to trust us, because your money won’t be in our hands – it’ll be in yours. After all, why should you have to compromise your privacy and safety for an exchange? Why should you have to fear the worst every time you deposit funds into your account? You shouldn’t, and with Cryptospace, you won’t.