CEX (Centralized Exchange)

A trading venue operated by a single company that custodies user funds.

A centralized exchange is a trading platform where a company holds user deposits and operates an internal order book. Binance, Coinbase, Kraken, and OKX are the largest. CEXs offer deeper liquidity, fiat on/off ramps, and customer support that DEXs typically don't.

CEXs are also single points of failure. Users deposit funds to the exchange's wallets and trade IOUs internally; the exchange could lose, freeze, or steal those funds. Proof-of-reserves attestations partially address this but don't prove liabilities, only assets. The FTX collapse demonstrated how quickly hidden insolvencies can spiral.