How to Check Exchange Security Using Binance as an Example: A Step-by-Step Guide

Check any exchange using 5 criteria in 15 minutes: reserves, incident history, team transparency, user reviews, and withdrawal terms.

Core Concept

A secure exchange protects against three main risks: hacks resulting in lost funds, bankruptcy without returning money, and scams — where the project is created specifically for theft.

In 15 minutes, you can check public data: reserves, incident history, team, reviews, and withdrawal conditions. This is like inspecting locks before renting an apartment — not studying the entire property management history, but enough for a basic understanding of risks.

Regulatory licenses don't guarantee security. FTX had government approvals, but went bankrupt, losing $8 billion in user funds.

Expert security architecture assessment isn't available to beginners, but public indicators provide insight into reliability.

Key takeaway: checking an exchange means analyzing available data, not guaranteeing absolute security.

Checklist

Five verification points in 15 minutes:

Each check takes 2-4 minutes. You can start with reserves — this shows whether the exchange has money to return your funds.

Key takeaway: The checklist provides basic risk understanding but doesn't replace caution when dealing with large amounts.

Reserves

Proof of Reserves shows whether an exchange actually holds users' cryptocurrency. It's like a bank statement — proof that the funds exist.

Binance publishes data on its official page monthly. As of October 2025, coverage was: BTC — 103.5%, USDT — 106.9%. This means for every bitcoin users deposited, the exchange holds 1.035 bitcoins in reserves.

A red flag is missing Proof of Reserves or data older than 3 months. A yellow flag is exactly 100% coverage with no buffer.

To verify wallet addresses, use Etherscan.io for Ethereum or Blockchain.com for Bitcoin. Enter the address from Binance's report and compare the balance with claimed reserves.

Example: if users deposited 10 billion USDT, Binance should hold at least 10 billion USDT in wallets plus an additional reserve.

Key takeaway: Proof of Reserves with coverage above 100% shows the exchange can return all user funds.

History

Incident verification shows how an exchange behaves during crisis situations. Look for information on CoinDesk, The Block, and CoinGecko.

In May 2019, Binance lost $40 million worth of bitcoin due to a hack, but compensated losses from the SAFU reserve fund within 24 hours — a green flag.

In October 2022, BNB Smart Chain suffered a $570 million hack, with funds partially frozen. The exchange responded quickly, halting the network to prevent further damage.

Red flags: the exchange hid the incident, didn't compensate user losses, or blocked withdrawals without explanation for longer than 48 hours.

Search queries: "binance hack," "binance withdrawal issues" for the past 2 years on Google and Reddit.

Key takeaway: what matters isn't the absence of incidents, but how quickly and completely they're resolved.

Team

Leadership transparency helps you understand who's responsible for the exchange. Anonymous teams are a red flag when it comes to managing money.

Binance's current CEO is Richard Teng, appointed in November 2023. He has CEO experience at Abu Dhabi Global Market, and his profile is available on LinkedIn.

Binance operates through legal entities in different jurisdictions. Examples of verifiable registrations include: BINANCE FRANCE SAS (France, AMF registration E2022-037), Binance Italy S.R.L. (Italy, OAM registration PSV5). A complete list of licenses is available on the official page.

Specifically for Binance, green flags include: the CEO makes public appearances, legal entities can be verified through official registries, and they have offices in Paris and Dubai.

Typical red flags include: anonymous team, no registration data available, and an address that's just a P.O. box in an offshore jurisdiction.

Key takeaway: A public team with verifiable legal entities reduces the risk of an exchange suddenly disappearing.

Reviews

Real user reviews reveal the day-to-day problems of an exchange. Look for patterns in complaints, not isolated negative comments.

Search platforms: Reddit r/binance, Trustpilot, Twitter/X using hashtag #binance + "withdrawal", "support".

Common Binance complaints: account locks for "temporary verification" without explanation, withdrawal freezes for 24 hours during transfers, slow support for urgent issues.

Red flags: mass complaints about withdrawal blocks, support not responding for over a week, sudden requests for additional documents during withdrawal. Green flags: issues resolved within 48-72 hours, support responds publicly.

Delays and fund freezes are a common problem across centralized exchanges, not just Binance. We don't recommend storing large amounts on CEX platforms: use the exchange for trading, then withdraw assets to your personal wallet. For amounts above €5,000 — split between multiple exchanges or store in non-custodial wallets.

Search query: "binance withdrawal problem reddit" for the past month — count the number of complaints and whether solutions appear in the comments.

Key takeaway: look for recurring complaints, ignore emotional reviews without specific facts.

Terms and Conditions

Withdrawal limits determine whether you can get your money back when you want to. Check the terms before depositing funds.

You can find this information in the "Fees" section on Binance's website and the withdrawal FAQ. For verified accounts, the limit is up to 8 million BUSD per day, with a minimum cryptocurrency withdrawal starting from €10.

Example: USDT withdrawal via Ethereum costs €1-5 in fees, with processing times of 10-30 minutes. Without KYC verification, the limit is 0.06 BTC per day.

Red flags include: no fee information on the website, unspecified limits, or terms of service stating "the exchange may block withdrawals at its discretion."

Practical test: deposit a small amount of €20-50 and withdraw it immediately. This lets you check the actual processing speed and fee amounts.

Key takeaway: transparent withdrawal terms with fixed fees demonstrate an exchange's trustworthiness.

Results

Binance passes the basic security check for beginners — 4 out of 5 green flags:

Yellow flag — slow support during account disputes. For amounts up to €5,000 — safe to use, for larger amounts — split between multiple exchanges.

Key takeaway: Apply this checklist to any exchange before registering — 15 minutes of verification can save your money.

*Disclaimer: This article is for informational purposes only and is not a financial recommendation. Cryptocurrency investments carry high risks. Always conduct your own research and consult with financial advisors before making investment decisions.