Exchange Hacks Expose Crypto Custody Risks

A crypto exchange hack occurs when attackers break into a trading platform's systems and steal digital assets from the exchange itself, not directly from users' personal wallets.

This can happen in various ways, including compromising hot wallets connected to the internet for daily withdrawals, accessing API systems tied to withdrawals, or using internal admin tools.

The bigger the loss, the deeper into custody the breach went, as seen in major exchange hacks like Binance, KuCoin, and Bybit.