Binance CEX dex

Binance uses its CEX Superpower to Rescue a Swaddled $30,000 Stolen Funds- Are DEXes Better?

October 16, 2020 Off By Ayobami Abiola

There seems to be an unending debate between Centralized Exchanges and Decentralized Exchanges. This debate has also extended to Centralized and Decentralized Finance (CeFi and DeFi). But in all, the majority seem to conclude that centralized exchanges are just another form of Banks in that Users are not in total control over their funds. Decentralized exchanges give total control over the decisions of how and what happens to their funds through their private keys. Multiple centralized exchange hacks have proven that many centralized exchanges are susceptible to hacks at any time, which is why the spotlight on DeFis has become so bright. Being decentralized has saved many from community-wide hacks which ravages centralized exchanges from time to time.

But even with the trade-offs, centralized exchanges have been a safe-haven to many scammed communities in desperate times of need. There have been scenarios where multiple people have been scammed of their funds from fake Decentralized Finance protocols and social media. Centralized exchanges were able to freeze the stolen funds after they have been reported and the communities get their money at the end of the day- something that is impossible with DeFis or Dexes.

An example is an experience recounted by a Binance customer and share by Binance on October 14th:

“… a crypto enthusiast (who prefers to be anonymous) approached us asking whether we could help recover 200,000 yuan (nearly $30,000) that had vanished overnight, he knew that the chances of recovery were slim.”

He had invested in a liquidity mining project expecting to reap high yield and pull funds after he had his profit. He didn’t realize that he had set himself up for a huge disaster:

“The next morning, the user woke up early and decided to check the project’s website for updates. They were shocked to see that the website was no longer accessible. Even worse, the project’s social media handles had been deleted.”

The user made contact with others in his shoe on the same project on telegram. They discovered that the funds stolen from them had been deposited by the developer on 10 Binance Exchange addresses. They made individual contact with the exchange support and with the right evidence and police report, the funds were frozen in time. The exchange then made efforts to return funds to the rightful owners:

“Once the funds were locked, we then moved to help users recover the stolen funds.”

There are many other examples where centralised exchanges have been the hero of stories which could have ended in tears and regret.

The bottom line is that no matter how perfect a system looks, there will always be trade-offs and weaknesses. But amidst the “which is the better” debate between Centralized and Decentralized Exchanges, Centralized and Decentralized Finance (CeFi and DeFi) protocols, we can all conclude that both complement themselves.

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