Centralised exchange failure

How it happens

1. 1 The balance shown on the account is a record kept by the service. Consulting it is not the same as checking a position under the direct control of your own keys.
2. 2 Withdrawal depends on processing by the exchange and on the conditions that apply to the asset and to the network.
3. 3 If withdrawals are halted, check the reason, the scope and the official updates. The balance on display does not prove that the assets are immediately available, and it does not by itself determine the final loss.

An example, with no proper name

An exchange temporarily suspends withdrawals of an asset, but keeps internal trading open. The price in that setting can move away from other markets, because a sale changes the account balance without necessarily allowing a withdrawal. The balance screen and the availability of an exit describe different situations.

The example describes the mechanism, not a real incident. Concrete cases in this segment belong to the people who lived them, and presenting them here would suggest an involvement that did not happen.

What the impact is

The consequence can range from temporary unavailability to a partial or a total loss. In an insolvency, restitution depends on the process and on the conditions that apply; this description guarantees neither a time limit nor a recovery.

What reduces the exposure

• Identify how much of your operation depends on the balance and the withdrawals at the exchange. Take that dependence into account when assessing the controls for safekeeping and continuity.
• When reading evidence of reserves, check who produced it, the date and its scope. It should be assessed together with the obligations and the conditions of the service.
• Consult the official notices about a suspension, and keep the records of the position and of the withdrawal attempts. Do not conclude the cause from the state on display alone.

What a claim in this family needs to prove

• The statement of the position at the exchange before the event.
• Evidence of the withdrawal attempt that was refused or not processed.
• The exchange's official communication, where one exists.

The exact requirement is the one in the published version of the purchased coverage contract. This list is what is usually necessary in this family.