During the recent crypto crash, Binance endured an outage, raising questions once again 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 crashed as many assets dipped due to a new tariff threat to China by the United States of America President, Donald Trump. The US president threatened to impose a 100% tariff on China which triggered serious chaos.
Heading into the weekend, the sector witnessed a massive sell-off as investors liquidated more than $20 billion. The crash wiped out about 10% of the crypto market’s total value.
During the chaos, Binance users attempted to withdraw their funds to reduce the losses, however, the platform failed to respond due to an outage. By failing to react swiftly and change their positions to reduce their losses, Binance users suffered tremendous exposure to the meltdown, causing them to lose a huge chunk of their deposit.
Within a few days, green candles began to come up on the price chart after the bloodbath, indicating that the market is recovering rapidly. Still, the dip is a subtle reminder that more risks will continue to emerge as the digital asset sector matures.
What happened to Binance?
Before the massive crashdown started, some Binance users noticed it, but were unable to react. Amidst the meltdown, the cryptocurrency exchange endured a deadlock as key functionalities like log-in, withdrawal, orders, and charts failed to respond.
Across various comments on X and Telegram, users mentioned how their stop losses didn’t work causing them noticeable losses. Likewise, Ethena’s USDe briefly lost its peg to the US dollar after plunging below $0.90%, causing huge liquidation.
Later, the cryptocurrency exchange confirmed the issue, stating that the platform is enduring huge traffic due to many requests from users at the same time. Binance promised to refund traders who lost their funds due to the downtime.
Thereafter, top executives from the cryptocurrency exchange, Richard Teng and Yi He issued a public apology about the issue. Despite the apology, community members pointed to the upsides of using self-custody platforms like Binance.
They accused Binance of deliberately stopping users from accessing their accounts to mitigate the loss. Meanwhile, a non-custodial platform will ensure users have unrestricted access to their funds due to their total control over the wallet’s seed phrase.
Why is security also another serious issue
Aside from questionable moves from custodial exchanges, their vulnerability to cyber attacks is a major dent that makes self-custody wallets a safer choice. In 2025 alone, the cryptocurrency space has endured high-profile attacks on centralized exchanges.
Bybit’s hack in February 2025 remains the largest loot on a centralized exchange since the inception of the blockchain sector. Within a few minutes, a North Korea-backed hacking syndicate, Lazarus Group, stole $1.4 billion in Ethereum from Bybit.
The infamous breach accounts for nearly 69% of all stolen assets from blockchain-based projects in the first half of 2025. The state-backed hackers are one of the leading threat actors to most custodial platforms. As of October 2025, the Lazarus Group has stolen more than $2 billion from the sector.
Further, the group mostly targets 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, endured a breach that exposed users’ data underlining that centralized exchanges are facing severe security vulnerabilities.
Another eyebrow-raising attack also manifested during the year as CoinDCX, a leading crypto exchange in India lost $44.2 million. Meanwhile, the attack on CoinDCX gained prominence due to how WazirX, a top centralized exchange in the country, had lost $234.9 million a year earlier.
The attack further strengthened the doubts of India’s Finance Minister, Nirmala Sitharaman who insists that cryptocurrency is far from a finished innovation.
Confirming some of her concerns, the cryptocurrency sector has lost more than $3.5 billion since 2012 to over 45 centralized exchange hacks. More so, the issue emphasized how big and well-financed centralized platforms despite their robust security are not immune to breaches and downtime.
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