During the recent crypto crash, Binance suffered an outage, which once again raised questions about the reliability of centralized exchanges. “Not your keys, not your coins” is a common phrase within the cryptocurrency community that refers to the risks associated with using centralized exchanges.
Around October 10, 2025, the crypto market collapsed as many assets fell due to a new tariff threat to China by United States President Donald Trump. The US president threatened to impose a 100% tariff on China, causing serious chaos.
Heading into the weekend, the sector witnessed a massive sell-off, with investors liquidating more than $20 billion. The crash destroyed approximately 10% of the total value of the crypto market.
During the chaos, Binance users attempted to withdraw their funds to cut losses, but the platform remained unresponsive due to an outage. By not reacting quickly and changing their positions to limit their losses, Binance users were extremely exposed to the meltdown, losing a large portion of their deposit.
Within a few days after the massacre, green candles began to appear on the price chart, indicating that the market is recovering quickly. Still, the dip is a subtle reminder that more and more risks will emerge as the digital asset sector matures.
What happened to Binance?
Before the massive crash started, some Binance users noticed this but were unable to respond. Amid the crisis, the cryptocurrency exchange reached an impasse as key functionalities such as login, withdrawal, orders, and charts were unresponsive.
In several comments on X and Telegram, users mentioned how their stop-losses did not work, causing them to suffer noticeable losses. Similarly, Ethena’s USDe briefly lost its peg to the US dollar after falling below $0.90%, causing a massive liquidation.
Later, the cryptocurrency exchange confirmed the issue and stated that the platform is experiencing huge traffic due to many requests from users at the same time. Binance promised to refund traders who lost their money due to the downtime.
Afterwards, top executives of the cryptocurrency exchange, Richard Teng and Yi He, issued a public apology over the issue. Despite the apology, community members pointed out the benefits of using self-management platforms like Binance.
They accused Binance of deliberately preventing users from accessing their accounts to limit losses. Meanwhile, a no-custodial platform ensures users have unrestricted access to their funds due to their full control over the wallet’s starting phrase.
Why is safety another serious issue?
Aside from questionable moves by custodial exchanges, their vulnerability to cyberattacks is a major dent that makes self-custodial wallets a safer choice. In 2025 alone, the cryptocurrency space has endured high-profile attacks on centralized exchanges.
Bybit’s February 2025 hack remains the largest loot on a centralized exchange since the blockchain sector’s inception. Within minutes, a North Korean-backed hacker syndicate, Lazarus Group, stole $1.4 billion worth of Ethereum from Bybit.
The infamous breach is responsible for almost 69% of all stolen assets from blockchain-based projects in the first half of 2025. The state-backed hackers are one of the main threat actors for most custody platforms. Since October 2025, the Lazarus Group has stolen more than $2 billion from the industry.
Furthermore, the group mainly focuses on centralized exchanges using social engineering tactics, such as disguising themselves as IT experts to infiltrate their employers. In May 2025, Coinbase, another similar platform to Binance, suffered a breach that exposed user data, underscoring that centralized exchanges face serious security issues.
Another eyebrow-raising attack manifested itself during the year when CoinDCX, a leading crypto exchange in India, lost $44.2 million. Meanwhile, the attack on CoinDCX gained notoriety due to how WazirX, one of the country’s leading centralized exchanges, had lost $234.9 million a year earlier.
The attack further reinforced the doubts of India’s Finance Minister Nirmala Sitharaman, who insists that cryptocurrency is far from a completed innovation.
What confirms some of her concerns is that the cryptocurrency sector has lost more than $3.5 billion since 2012 due to more than 45 centralized exchange hacks. More than that, the issue highlighted how large and well-funded centralized platforms, despite their robust security, are not immune to breaches and downtime.
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