Trading
CEX
Centralized Exchange - a cryptocurrency exchange operated by a company that acts as an intermediary between buyers and sellers. Users deposit funds to the exchange, which manages order matching and custody.
Last updated: January 5, 2025
What is a CEX?
A CEX (Centralized Exchange) is a cryptocurrency exchange run by a company that facilitates trading between users. When you use a CEX, you deposit your crypto to the exchange, which then handles order matching, custody, and settlement.
How CEXs Work
Trading Process
- Create account (with KYC)
- Deposit funds (fiat or crypto)
- Place orders (market/limit)
- Exchange matches orders
- Balances update instantly
- Withdraw when ready
Order Book System
- Buyers place bids
- Sellers place asks
- Exchange matches orders
- Deep liquidity on major pairs
Top CEXs
| Exchange | Features | Best For |
|---|---|---|
| Binance | Largest, most coins | Active traders |
| Coinbase | Regulated, beginner-friendly | US users |
| Kraken | Security-focused | Security-conscious |
| Bybit | Derivatives leader | Futures traders |
| OKX | Full-featured | Advanced users |
CEX Advantages
User Experience
- Easy to use interface
- Mobile apps available
- Customer support
- Educational resources
Liquidity
- High trading volumes
- Tight spreads
- Large orders possible
- Instant settlement
Fiat Integration
- Bank transfers
- Credit/debit cards
- Local payment methods
- Direct fiat trading pairs
Features
- Advanced order types
- Margin trading
- Futures and options
- Staking services
- Savings products
CEX Disadvantages
Custody Risk
- “Not your keys, not your coins”
- Exchange could be hacked
- Bankruptcy risk (FTX example)
- Withdrawal restrictions possible
Privacy
- KYC required
- Transaction monitoring
- Data breaches possible
- Geographic restrictions
Availability
- Maintenance downtime
- Server issues during volatility
- Withdrawal freezes
- Delisting risks
CEX Security Measures
Exchange-Side
- Cold storage (majority of funds)
- Multi-signature wallets
- Insurance funds
- Regular audits
- Bug bounties
User-Side
- Two-factor authentication (2FA)
- Withdrawal whitelists
- API key permissions
- Login notifications
Choosing a CEX
Key Factors
- Security history - Past hacks?
- Regulation - Licensed in your region?
- Fees - Competitive rates?
- Liquidity - Volume on your pairs?
- Features - What you need?
- Reputation - User reviews?
Red Flags
- Anonymous team
- No regulatory compliance
- Withdrawal complaints
- Too-good-to-be-true yields
- Poor security practices
CEX Best Practices
Security
- Enable 2FA (authenticator app, not SMS)
- Use unique, strong password
- Enable withdrawal whitelist
- Monitor account activity
Risk Management
- Don’t store all funds on exchange
- Withdraw to cold wallet
- Diversify across exchanges
- Keep records for taxes
Trading
- Start with small amounts
- Understand fee structure
- Use limit orders when possible
- Check liquidity before trading
CEX vs DEX Decision Guide
Use CEX When
- New to crypto
- Need fiat on-ramp
- Trading large volumes
- Want customer support
- Need advanced features
Use DEX When
- Want self-custody
- Trading new/small tokens
- Privacy is priority
- CEX unavailable in region
Notable CEX Events
Mt. Gox (2014)
- Largest exchange at time
- 850,000 BTC lost
- Bankruptcy, years of recovery
FTX (2022)
- Major exchange collapse
- Customer funds misused
- Highlighted custody risks
Lessons
- Only keep trading amounts on CEX
- Diversify exchange usage
- Research before depositing
CEX Evolution
Trends
- Proof of reserves
- Better regulation
- More insurance
- Improved security
- CEX-DEX hybrid features
Ready to Start Trading?
Now that you understand cex, explore the best exchanges to begin your crypto journey.