Definition ∞ CEX Risk refers to the inherent hazards associated with utilizing centralized cryptocurrency exchanges. These risks encompass potential security breaches, operational failures, or adverse regulatory actions that can impact user assets. Users of CEX platforms entrust their digital holdings to a third party, introducing counterparty risk. This concentration of assets makes them attractive targets for malicious actors.
Context ∞ The ongoing debate in the digital asset sector frequently addresses the balance between the convenience offered by centralized exchanges and the security concerns they present. Protecting user assets through robust cybersecurity, transparent proof-of-reserves, and clear regulatory frameworks remains a critical discussion point for the industry and its participants.
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