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LUNA Shows Dangers Of Holding On Exchanges

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Written by   27
1 month ago

This Luna catastrophe has brought along with it quite a few valuable lessons for investors. Beyond the concept that investing all of your eggs in one basket being dangerous, we have seen a lot of centralized damage control playing out and trapping some users in the process.

Binance

We saw Binance delist LUNA from the perpetual exchange and also freeze up the purchase and sale of LUNA on the platform. With this, it also froze withdrawals for a time and users were pretty much stuck to watch their holdings go up and down in value with no way of selling them off or shipping them somewhere that they could have sold them.

While this may have actually been done with good intentions (i.e. helping people control their risk), it handcuffed users and it brings up that old point of "not your keys not your crypto" as the CEX decided when you could sell again.

Other Exchanges

I heard that this happened on KuCoin in basically the same way. On Coinbase, Luna was delisted and the tokens that I had there are no longer available (though it was very few and not worth whining about). I heard that the same thing happened on UpBit, Kraken, Binance.us and more as CEX's seeked to react to the volatile dumping of a once top-10 cryptocurrency.

This probably could've happened to anyone and it will likely happen again in the future as long as people are storing their crypto on centralized exchanges. I truly believe that the intentions of the CEX's are usually to protect the users, but similar to things that happened with Robinhood during the Gamestop pump, I just think that these decisions should be left for the user to make.

The whole reason that I love cryptocurrency is the fact that responsibility falls on the individual and that financial freedom of movement comes at the cost of the chance that an error could be made. I am willing to take the risks and that is why I don't store my cryptocurrency on exchanges despite the ease of use in doing so.

Be careful where you decide to keep your assets and know the risks of keeping it somewhere that you don't have 100% control over.

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1 month ago
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