There have been numerous cases of hacks and breaches that have occurred at crypto exchanges, including thefts at Binance ($40 million), Crypto.com ($34 million), BitMart ($150 million), AscendEX ($80 million) and IRA Financial Trust ($37 million). This is in addition to multibillion dollar flameouts of exchanges like FTX and Voyager or lending companies such as CelsiusCEL 0.0% and BlockFi that offered some brokerage services.

Making the situation worse, the vast majority of crypto investments are not covered by insurance that protects traditional financial products such as securities and bank deposits. An additional fact for investors to keep in mind is that crypto exchanges, even those that do offer insurance, will usually not reimburse users whose accounts are hacked due to poor password protection, phishing links or similar actions that are considered user errors