When you keep bitcoin on a platform, you hold a promise. If the platform lends your coins, loses them, is hacked or commits fraud, withdrawals stop and customers become creditors in a bankruptcy that can take years.
It has happened, again and again
- 2014, Mt. Gox: the largest exchange of its time collapsed with hundreds of thousands of bitcoin missing.
- 2019, QuadrigaCX: customers lost access to their funds after the death of its founder, the only person said to hold the keys.
- 2022, Celsius: a lending platform froze withdrawals, then went bankrupt.
- 2022, FTX: one of the largest exchanges collapsed within days; customer funds had been misused.
The warning signs
- Yields on deposited bitcoin: the return comes from lending your coins to someone.
- No credible proof of reserves and liabilities.
- Withdrawal delays, new limits, or sudden changes to terms.