If you follow signals, your money sits on an exchange most of the time. Four public collapses show what actually happens next, and which of it you decide at signup.

What actually happens on the day an exchange stops paying out?

Withdrawals stop first. The announcement comes later, and by then the decision has been made for you.

This is the part people plan around wrongly. The mental model is a slow slide with time to react: bad news, then a scramble, then an orderly exit for whoever moves quickly. What the records show is closer to a switch. Processing slows, then pauses "for maintenance", then a filing appears. Anyone still holding a balance at that moment holds it until a court says otherwise.

So the useful question is not how fast you would react. It is what your position would be if you could not react at all. Everything below is about that position.

Are you a customer or a creditor?

It depends on which product you clicked, and it was decided by the terms of use before anything went wrong.

On 4 January 2023, Judge Martin Glenn of the US Bankruptcy Court for the Southern District of New York ruled on who owned the crypto that Celsius customers had deposited. The answer split by account type. Assets in Earn accounts, the interest-bearing product, had their title transferred to Celsius by the terms of use the customer accepted at signup. Those coins became property of the bankruptcy estate, and the people who deposited them became unsecured creditors: at the back of the queue, paid a fraction, paid last.

Assets in Custody accounts were held to be a different matter. The court found those were not property of the estate, which left those customers with a far stronger claim to simply get their coins back.

Same company, same customers, same coins. The difference was a toggle in the product menu and a paragraph of the agreement nobody reads. FTX customers landed on the wrong side of the same line: when the company filed on 11 November 2022, its more than one million customers were classified as unsecured creditors.

This is the single most useful thing on this page, because it is the only part you control completely, and you control it before there is any trouble.

What did "100% recovery" actually mean at FTX?

It meant 100% of a dollar figure fixed on the day the exchange filed, not the return of the coins you deposited.

US bankruptcy law values claims as of the petition date, and the FTX estate applied it. Customer claims were converted into dollars at November 2022 prices, and the debtors' filing put bitcoin at $16,871 per coin for that purpose. Everything after that is arithmetic on a dollar claim.

The FTX Recovery Trust has run distributions since February 2025, and by its announced July 2026 round it reported cumulative recoveries of about 105% of allowed claim value for dotcom customer claims. That number is real and it is genuinely a good outcome by the standards of these cases.

Now put it next to what a depositor lost. Someone holding one bitcoin on FTX when it filed had a claim of $16,871. At 105%, that pays roughly $17,715. It does not matter what a bitcoin costs while you are reading this. The claim was frozen in dollars in November 2022, near the bottom of that cycle, and every move in the price since then belongs to whoever holds the coin. That is no longer you.

"Creditors made whole" and "depositors got their money back" are two different sentences. The first one was true at FTX. The second one was not.

How long does getting paid back take?

Long enough that the answer is measured in years, and the schedule is not a promise.

Mt. Gox halted trading and filed for bankruptcy in February 2014, having lost roughly 650,000 BTC, of which about 140,000 were later recovered. The Tokyo District Court approved a civil rehabilitation plan in 2021, which by itself took seven years. Repayments to creditors began on 5 July 2024, a decade after the collapse. The deadline for completing them has since been pushed to 31 October 2026, the third such extension after earlier deadlines in October 2023 and October 2024.

Twelve years, so far, for people who were owed the money the whole time.

FTX moved faster: filing in November 2022, first distributions to the smallest claims in February 2025. That is still more than two years before anyone saw anything, and FTX is the encouraging example.

Whatever sits on an exchange when it stops is not merely at risk. It is unavailable, for a period you cannot predict, in an amount you will not learn for a long while. If you are following signals, the practical cost lands before any of that: you cannot trade with it, and you cannot use it to cover a position somewhere else.

Does a hack mean the money is gone?

No. What decides the outcome is whether the operator can absorb the loss, and that is a question about their balance sheet rather than about the size of the theft.

On 21 February 2025, attackers took roughly 401,347 ETH from a Bybit cold wallet during a routine transfer, by manipulating what the signers saw when they approved it. The haul was worth over $1.4 billion at the time, and the FBI's public notice five days later put it at $1.5 billion and attributed it to North Korea. The two figures are not a contradiction; the price of ether moved between the theft and the notice, which is a small lesson in reading any crypto number without its date attached.

It was the largest theft the industry had seen. Customers did not pay for it. Bybit closed the gap within days through a bridge loan covering about 80% of the missing ether plus large deposits and purchases, and kept processing withdrawals throughout.

Compare that with an exchange whose losses arrived through lending customer assets and could not be covered from anywhere. The theft was bigger in the case where nobody lost their deposit. Size of the hole tells you very little; who is standing behind it tells you most of what matters.

What does proof of reserves actually prove?

That the exchange controls certain assets. Not that it can pay everyone, which is a different claim and the one you care about.

A Merkle-tree proof of reserves lets you check that your balance was included in a total, and lets the exchange show on-chain holdings backing that total. Both halves concern assets. Solvency is assets measured against liabilities, and a proof of reserves published on its own says nothing about what the exchange owes: undisclosed loans, obligations to counterparties, customer assets already lent out elsewhere. An exchange can display a large, genuine, fully verifiable pile of coins and still be deeply insolvent.

This is not a fringe objection. It is the consistent caveat in the field, including from accounting firms whose business is attestation.

What raises the value of such a report: liabilities disclosed next to the assets, an independent auditor rather than a tool the exchange runs on itself, and a real cryptographic proof rather than a published list of wallet addresses. Absent those, treat the badge as marketing that happens to be accurate about one side of a balance sheet.

How much belongs on an exchange if you follow signals?

Only what the open positions need, for only as long as they are open. The question is never whether to use an exchange; it is how much of your money lives there while you sleep.

Following signals forces you onto a venue. You cannot take a perpetual futures call from cold storage, and the mechanics of what those calls actually open are covered in Spot, futures and perpetuals explained. What that requirement does not force is keeping the whole account funded permanently.

The separation that follows from everything above:

  1. Trading balance on the exchange: margin for open positions, plus a working buffer. This is the money you have consciously decided to expose to the venue.
  2. Everything else off it, held where you control the keys. What that means in practice, including what custody actually is, is in Crypto wallets explained.
  3. No interest-bearing products with the trading balance. The Celsius ruling is the reason, and the yield was never priced for the risk of losing title to the asset.

Sizing that trading balance is the same exercise as sizing a position, and it runs on the same arithmetic: Position sizing for signal followers.

Which decisions can you not change later?

The ones made at signup, on screens designed to be clicked through in under a minute.

Four of them, and each takes longer to reverse than to get right:

  • Which product holds the balance. Plain trading account, or the yield product that transfers title. Celsius customers learned the difference from a judge.
  • What you agreed to. The terms of use are the document a court reads first. You do not have to enjoy them; you do have to know whether they say the assets remain yours.
  • What your API keys can do. A key with withdrawal permission is an exchange-sized risk you added yourself, on top of the one the exchange already carries. See API keys and account security.
  • Whether you are diversified across venues at all. One exchange holding everything is one filing away from taking all of it out of reach at once.

None of this requires predicting which exchange fails. That is the appeal of it: the four decisions cost nothing while everything is fine, and they are the only ones available once it is not.

What this changes about following a channel

A channel's record and the venue holding your money are two separate risks, and a good answer on one tells you nothing about the other.

A channel can call trades accurately for a year while the exchange it routes you to is quietly insolvent. The reverse holds too: the soundest venue in the market will not improve a channel whose calls do not survive a replay. When you are weighing whether to follow someone, you are answering one question, and the account you follow them from is a second one you have to answer yourself.

The channel side is what we measure, and the current ratings for the channels we can score are at Signal Providers.

Nothing here recommends or rules out any venue. The exchanges named above appear because their failures and their responses are matters of public record, and the record is the only thing on this page worth trusting.

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