Why CZ Says Self-Custody Is Riskier Than Centralized Exchanges?
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Binance CEO CZ cites River's 2025 data via Willy Woo showing 1.57M BTC lost in self-custody versus 1.51M BTC on exchanges (CEX), arguing self-custody losses are likely underreported and exchange breaches get more media visibility. He pointed to Binance’s SAFU expansion into a $1 billion Bitcoin reserve while noting security risks rise — hacks jumped ~50% in H1 2026 and a Coldcard firmware bug cost a user $1.6M — framing custody as a risk-tolerance decision for crypto adoption. Bitcoin traded near $60,347 at the time of reporting.
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In Brief
- CZ says exchanges are statistically safer to use than self-custody.
- Willy Woo data shows 1.57M BTC lost via self-custody, 1.51M on exchanges.
- CZ credits Binance's SAFU fund for covering exchange-side hack losses.
Binance founder Changpeng Zhao (CZ) said exchanges are statistically safer than self-custody, citing new Bitcoin (BTC) loss data from analyst Willy Woo.
Woo shared figures from River’s 2025 industry report on Monday, showing 1.57 million BTC lost through self-custody compared with 1.51 million BTC lost on exchanges. The gap sits below 60,000 BTC.
Why CZ Says Exchange Hacks Look Worse Than They Are
Zhao argued the comparison misses how each side reports losses. Exchange hacks generate major headlines. Hence, reporters and researchers track them closely. Self-custody losses, however, rarely reach the same visibility.
Lost private keys, forgotten passwords, and destroyed hardware wallets often go unreported. As a result, Zhao suggested the self-custody figure likely understates the true scale of losses.
He also noted that some exchange-side losses come from platforms that no longer operate. BitMEX, for instance, announced its shutdown in July, closing an 11-year run. Meanwhile, industry hack tracking shows incidents climbed roughly 50% in the first half of 2026, even as total stolen sums fell.
Bitcoin Losses from Exchanges. Source: River
Binance’s SAFU Fund and the Self-Custody Comparison
Zhao pointed to Binance’s compensation practice as a key part of his argument. The exchange, he said, has consistently covered user losses tied to CEX-side breaches. Binance recently expanded its Secure Asset Fund into a $1 billion Bitcoin reserve.
It is statistically safer to store coins on exchanges than to self custody. 👇A few thoughts:Assuming the data is correct, my impression is Willy has always been a strong supporter for self custody.Hack data is easier to collect on the CEX side, usually major news. It is… https://t.co/tqi1rUk5Q7
— CZ 🔶 BNB (@cz_binance) August 4, 2026
Self-custody risk has drawn fresh attention this month. A Coldcard hardware wallet vulnerability drained BTC from users in early August. One victim lost $1.6 million in minutes despite following standard security steps. Zhao weighed in on that incident too, warning that no wallet setup guarantees full protection.
Zhao stopped short of recommending exchanges over private wallets. Instead, he framed the choice as one of risk tolerance and product fit rather than a simple safety ranking.
Whether Woo’s data holds up against further scrutiny remains an open question. Self-custody losses are inherently harder to verify than exchange breaches. Bitcoin traded near $60,347 at the time of writing, up roughly 1.2% over 24 hours.
Read the article at BeInCrypto
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