How to Protect Yourself from Exchange Hacks

Crypto exchanges get hacked. Billions have been lost to exchange hacks. Here is how to protect your funds whether you use centralised or decentralised exchanges.

Exchange hacks are a feature of the crypto landscape, not a bug. Centralised exchanges hold billions in user funds, making them the highest-value targets in the crypto ecosystem. FTX ($8B), Binance ($570M), Bybit ($1.5B in 2025) — major exchanges get compromised regularly. Here is how to protect yourself.

The Self-Custody Principle

The fundamental protection: not your keys, not your coins. Funds held on an exchange are the exchange's liability, not yours. When an exchange is hacked, withdrawals freeze. When an exchange goes bankrupt (FTX), users become unsecured creditors. The only guaranteed protection against exchange risk is holding your own private keys in a self-custodial wallet like Steyble. If you must use an exchange, use it for trading only — withdraw to your wallet after each session.

Exchange Security Best Practices (For Funds You Must Keep There)

The Risk Tiering Approach