Custody & scams
Who holds your coins
Coins on an exchange are held by the exchange (custodial). Exchanges can freeze withdrawals or collapse, as FTX did in 2022. A self-custody wallet holds your coins with a seed phrase: 12 or 24 words that can restore the wallet. Anyone with those words owns your coins.
Common scams
Never share your seed phrase; no real exchange staff will ask for it. Watch for fake websites and giveaway "send 1, get 2 back" scams, pump-and-dumps in tiny coins, and rug pulls, where a project's creators take the money and disappear.
Remember: If it sounds guaranteed, it is a scam.
Test yourself
Someone claiming to be exchange staff asks for your seed phrase. You should…
Refuse: anyone with it can take your coinsReal exchange staff never need your seed phrase.
Coins left on an exchange are…
Held by the exchange (custodial)You rely on the exchange to give them back.
A rug pull is when…
A project's creators take investors' money and vanishCommon with brand-new tiny coins.
"Send 1 ETH, get 2 back" is…
A scamNobody gives away free money.
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