The abrupt collapse of global giants like FTX demonstrated that no exchange is too big to fail. To protect your capital from bankruptcy freezes, you must understand counterparty risk and implement security protocols.

The Limits of Fund Segregation

Regulated exchanges in Japan trust-segregate client funds, providing strong recovery probabilities if insolvency occurs. However, bankruptcy courts can lock assets for months or years during settlement, leaving you unable to trade.

Mitigating Counterparty Risks

• Minimize Exchange Exposures: If you are not actively trading, move assets to a personal cold storage wallet. (Not your keys, not your coins).
• Diversify Accounts: Split your operational capital across multiple exchanges to mitigate single points of failure.
• Diversify Stablecoin Holdings: Spread stablecoin positions between USDT and USDC to mitigate issuer default or de-pegging risks.