Plain English
A CEX is a centralized exchange — a company that operates a crypto trading venue. You open an account, complete KYC, deposit funds, and trade through their order book. Coinbase, Kraken, Gemini, and Binance are the major ones.
How it actually works
The exchange custodies your assets in its wallets and tracks your balance internally. Trades execute against other users on the platform’s order book. Fiat on-ramps (linking a bank account or card) and customer support are the structural advantages over a DEX. The trade-off is counterparty risk: the exchange holds your assets, and exchange failures have repeatedly resulted in customer losses (Mt. Gox, Celsius, FTX).
What it means for you
CEXes are useful for fiat on-ramps and active trading with deep liquidity. For long-term holdings, members move assets off the exchange to self-custody. The line: do not keep more on a CEX than you would be willing to lose.
We cover CEX selection criteria, withdrawal protocols, and the operational practices that protect your funds even when an exchange suffers a security incident.
Educational content only. Not investment, tax, or legal advice.