CZ Reminds Crypto Traders: Store Your Assets Yourself or Choose a Large Exchange

After BitMEX dan BitMart Announcing plans to shut down their exchange, Binance founder CZ (Changpeng Zhao) warned traders of the security risks associated with storing assets on small exchanges.

He emphasized that acquiring a crypto exchange is more complicated than buying other businesses due to security risks from legacy backdoors and security holes left by previous teams.

CZ states that traders should choose between two main options: self-custody or use the largest exchanges with the best security.

Key Points

• CZ acquiring a crypto exchange carries hidden security risks, especially since “legacy backdoors” could compromise assets after the acquisition.

• BitMEX is scheduled to close on September 23, 2026, while BitMart also announced the cessation of operations while still allowing orderly withdrawals of assets.

• CZ emphasizes two main options for traders: self-custody or choose the largest exchange with the best security.

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BitMEX and BitMart Shut Down Operations

BitMEX, a well-known crypto derivatives exchange, announced plans to shut down its operations on September 23, 2026.

Meanwhile, BitMart also stated that it would cease its exchange operations while still providing users with the opportunity to withdraw their assets in an orderly manner during the wind-down process.

The decision by these two exchanges to shut down operations demonstrates that the crypto industry still faces significant challenges, both in terms of regulation, security, and business sustainability.

For users, this serves as an important reminder about the risks of storing assets on exchanges, especially those that don't fall into the "too big to fail" category.

CZ Warning: Exchange Acquisition Risk is Small

Source : X/@cz_binance

CZ (Changpeng Zhao) He highlighted that acquiring a small crypto exchange carries unforeseen risks. He stated:

"The hidden risk isn't the code, it's the key history. You buy the books and the matching engine, you also inherit every person who ever touched a signer, every old backup, every ex admin. Audits read code. They can't tell you who still has a copy of the seed."

This means that while a security audit can examine the code and smart contracts, it cannot reveal who still has access to private keys, seed phrases, or old backups from former administrators.

This risk makes acquiring small exchanges very risky, as the buyer could inherit the potential for hacking from the security holes left behind.

CZ also added that exchange acquisitions are usually driven by the desire to gain a user base that can become a potential source of revenue, not by superior technology.

"No one is acquiring these type of companies because of tech, it's mainly because of users that are potential revenue. If exchange had superior tech why did it shut down?" ujarnya.

Read Also: What Is Custody in Crypto? A Complete Explanation

Two Options for Traders: Self-Custody or the Largest Exchanges

In response to this situation, CZ gave clear advice to crypto traders:

1. Self-Custody (Keep Your Own Assets)

Storing crypto assets in a personal wallet (cold wallet or hardware wallet) gives you complete control over your assets. You don't have to worry about exchanges going bankrupt, closing down, or being hacked.

However, this also means that you are fully responsible for the security of your seed phrase and private key.

2. Choose a Large Exchange

If you still want to use an exchange, choose one with the best security reputation.

Larger exchanges tend to have greater resources for cybersecurity, better security teams, and a more proven track record.

CZ seems to be indicating that Binance, as the largest exchange, is a safer option than smaller exchanges that are at risk of closure or being hacked.

Read Also: The Best Crypto Wallets of 2026 to Secure Your Assets!

Market and Community Reactions

CZ's warning received widespread attention in the crypto community. Many users on Twitter agreed with CZ's views, especially after seeing the closures of BitMEX and BitMart.

Some comments highlighted that this is proof that “not your keys, not your coins” remains the most fundamental principle in crypto.

While large exchanges offer convenience and liquidity, there is still a risk of losing access to assets if the exchange experiences problems.

Implications for Crypto Asset Security

The BitMEX and BitMart cases, as well as CZ's warning, highlight several important points:

1. Exchange Risk Is Always There

No exchange is 100% secure. Even large exchanges can be hacked, go bankrupt, or be subject to regulation.

2. Self-Custody Is the Safest

Storing your assets yourself is the best way to ensure long-term security, as long as you keep your seed phrase safe.

3. Risk Diversification

Don't store all your assets on one exchange. Spread them across multiple wallets and exchanges to reduce risk.

4. Monitor Exchange Developments

If the exchange you are using shows any signs of trouble (pending withdrawals, bad news, or closure announcements), withdraw your assets immediately.

Read Also: How to Download Bittime on Play Store and App Store, Easy!

Conclusion

The closures of BitMEX and BitMart serve as a reminder that no exchange is immune to risk.

CZ's warning about the risks of acquiring small exchanges and advice on choosing self-custody or larger exchanges provide valuable guidance for crypto traders.

Ultimately, the principle of “not your keys, not your coins” remains the cornerstone of crypto asset security.

Make sure you are always vigilant and take appropriate protective steps for your digital assets.

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FAQ

What happened to BitMEX and BitMart?

BitMEX is scheduled to close on September 23, 2026, while BitMart also announced the cessation of exchange operations while still allowing orderly asset withdrawals.

What is CZ's warning about acquiring small exchanges?

CZ warned that acquiring small exchanges is risky due to legacy backdoors and access from former teams that could still compromise assets. Security audits cannot detect who still has access to seed phrases or private keys.

What are CZ's two main options for traders?

Store your assets yourself (self-custody) or use the largest exchange with the best security.

Why do small exchanges close despite having the technology?

CZ stated that exchange acquisitions are usually driven by a desire to gain a user base, not superior technology. If an exchange has superior technology, why would it shut down?

What is self-custody?

Self-custody is storing crypto assets in a personal wallet (cold wallet or hardware wallet) so you have full control over your assets.