Do Crypto Investors Trust Exchanges After Hacks? | TU Research

Crypto exchanges provide convenient access to trading and custody services, supported by authentication tools, withdrawal controls, and security monitoring. However, major hacks, phishing, and fraudulent alerts continue to pose risks to investors. Trusting an exchange does not mean ignoring these threats, as users can remain confident while strengthening their account protection.

Research from the FCA, EY-Parthenon, TRM Labs, and Chainalysis highlights the growing importance of secure custody, investor awareness, and effective responses to cybersecurity threats.

The research aims to answer key questions:

• Do investors still trust crypto exchanges?

• Do hacks encourage better security practices?

• Can investors respond to account breaches?

• Which authentication methods are most common?

• Can investors spot fake security alerts?

• Where do investors verify hack reports?

• Do investors understand proof of reserves?

• What restores trust after an exchange hack?

Findings

Institutional validation

Institutional research suggests that cryptocurrency exchanges remain central to digital asset investing, while security, custody safeguards, and investor awareness are becoming increasingly important.

The UK's Financial Conduct Authority (FCA) found in its Cryptoassets Consumer Research 2025 that 73% of UK cryptoasset users obtained cryptocurrencies through centralized exchanges, up from 69% in 2024. The findings highlight the continued importance of exchanges despite ongoing cybersecurity concerns.

The 2026 Institutional Investor Digital Assets Survey by EY-Parthenon and Coinbase found that 66% of institutional investors prioritized security and key-signing protocols when selecting custody providers, compared with just 8% in 2025. Additionally, 61% used multiple custodians, reflecting growing attention to asset protection.

TRM Labs reported 207 cryptocurrency hacks and exploits in the first half of 2026, compared with 83 a year earlier. However, total losses declined from approximately $2.3 billion to $972 million. Infrastructure compromises accounted for around 76% of stolen funds, highlighting the importance of platform-level security.

Meanwhile, Chainalysis estimated approximately 158,000 personal wallet compromise incidents in 2025, affecting at least 80,000 victims and resulting in $713 million in losses. These findings emphasize the importance of phishing awareness, secure authentication, and responsible asset management.

Regulators have also highlighted the importance of investor protection. IOSCO calls for stronger custody safeguards, while the PCAOB cautions that proof of reserves does not guarantee an exchange's financial stability or the safety of customer assets.

Theoretical research

Investor trust in cryptocurrency exchanges can be understood through risk perception and protective behavior. Trusting an exchange does not mean ignoring security threats. Investors may consider a platform reliable while using strong authentication, withdrawal controls, and other safeguards to protect their assets.

This distinction becomes particularly important after a major hack. News of a security breach can encourage investors to review their account settings, strengthen authentication, or reconsider how they store cryptocurrency. However, it can also create uncertainty that makes users more vulnerable to phishing attempts and fraudulent security alerts.

Kahneman and Tversky explored this mechanism in Prospect Theory: An Analysis of Decision under Risk. Their research showed that people evaluate potential gains and losses differently, with losses often carrying greater psychological weight. In cryptocurrency markets, fear of losing assets may encourage investors to act quickly, sometimes without verifying whether a security warning is legitimate.

This creates a tension between security awareness and emotional decision-making. Some investors respond to hacks by strengthening their protection, while others may follow suspicious instructions or make rushed transfers. Meanwhile, confidence in an exchange does not necessarily reflect how well users understand its security measures.

The key factor may therefore be not whether investors trust cryptocurrency exchanges, but how that trust translates into practical security behavior. This provides the theoretical basis for examining investor confidence, authentication practices, phishing awareness, and preparedness for potential account breaches.

Survey data

The research examines how cryptocurrency investors perceive centralized exchange security, respond to potential threats, and use available account protection tools.

Methodology

The study was conducted using a structured online survey based on the CAWI methodology.

• Sample composition 1,200 retail cryptocurrency investors.

• Geographical framework: North America, Europe, Asia, Latin America, Africa, and the Middle East.

• Age range: 18–60 years.

• Participation criteria: Individuals who have used centralized cryptocurrency exchanges within the previous 12 months.

Research team

The study was conducted by our experts:

• Anastasiia Chabaniuk (Author, TU research) – research design and interpretation.

• Chinmay Soni (Fact-checker) – data validation and statistical verification.

• Ciaran Ryan (Editor-in-Chief) – editorial and methodological supervision.

• TU research team (Andrey Mastykin, Oleg Tkachenko) – data collection and analysis.

Do crypto investors still consider centralized exchanges safe?

Respondents were asked how they assess the overall safety of centralized cryptocurrency exchanges.

Insight: A combined 67% consider centralized exchanges safe, compared with 19% who express security concerns. The distribution suggests that investor confidence can remain relatively strong even as awareness of cybersecurity threats increases.

Do exchange hacks encourage investors to improve their security?

Respondents were asked whether reports of major cryptocurrency exchange hacks had changed their security behavior during the previous 12 months.

Changes in investor security behavior:

• Reviewed security settings – 23%;

• Strengthened authentication – 21%;

• Changed asset storage – 12%;

• Reviewed security policies – 8%;

• Existing protection was sufficient – 24%;

• No changes for other reasons – 8%;

• Unaware of major hacks – 4%.

Insight: Some 64% report taking additional precautions after learning about major security incidents. Reviewing account settings and strengthening authentication are the most common responses, suggesting that many investors prefer improving their existing protections rather than abandoning centralized exchanges.

Would crypto investors know what to do if their account was compromised?

Respondents were presented with a scenario involving an unfamiliar login and an unauthorized withdrawal attempt.

Insight: Some 38% select the most comprehensive immediate response: securing the account through verified channels and contacting official support. Another 25% would change their password first, which can also be an appropriate protective measure. The results highlight the value of clear incident response instructions.

Which security measures do investors use on their exchange accounts?

Respondents were asked to identify the strongest authentication method enabled on their primary exchange account.

Primary account security methods:

• Security key or passkey – 13%;

• Authenticator app – 39%;

• SMS authentication – 22%;

• Password and email verification – 17%;

• Password only – 6%;

• Not sure – 3%.

Insight: A combined 74% use two-factor or stronger authentication, with authenticator apps being the most common option. However, protection levels vary, and phishing-resistant methods can offer additional security against credential theft.

Can crypto investors recognize a fake exchange security alert?

Respondents were shown a suspicious message requesting urgent account verification through an embedded link.

Insight: A combined 64% choose to verify the message independently or contact official support. However, 28% would interact with the suspicious message or its embedded link. This highlights the importance of recognizing phishing attempts and avoiding unverified security instructions.

Where do investors verify information about exchange security incidents?

Respondents were asked which source they would primarily use to confirm reports of a cryptocurrency exchange hack.

Primary sources of security information:

• Official exchange website or app – 43%;

• Verified exchange social media – 26%;

• Financial news websites – 15%;

• Blockchain security researchers – 7%;

• Online communities – 6%;

• Do not verify – 3%.

Insight: Some 69% primarily rely on official exchange channels, including websites, applications, and verified social media accounts. However, users should independently confirm the authenticity of these sources, particularly during periods of heightened uncertainty.

Do investors understand what proof of reserves actually means?

Respondents were asked to identify the most accurate statement about cryptocurrency exchange proof-of-reserves reports.

Insight: Only 39% correctly recognize the limitations of proof of reserves, while 44% associate these disclosures with guarantees they do not necessarily provide. This suggests that greater financial transparency should be accompanied by clearer explanations of what reserve reports actually demonstrate.

What would help restore investor confidence after an exchange hack?

Respondents were asked which factor would matter most when deciding whether to continue using an exchange following a major security incident.

Factors supporting investor confidence:

• Transparent reporting – 43%;

• Full customer compensation – 24%;

• Independent security audit – 15%;

• Timely official communication – 10%;

• Stronger account protection – 5%;

• Nothing would restore trust – 3%.

Insight: Transparent incident reporting and verified security improvements are the leading factors at 43%, followed by customer compensation at 24%. Only 3% indicate that nothing would restore their confidence, suggesting that clear communication and demonstrable corrective action can play an important role in maintaining investor trust.

Practical implications for crypto investors

Cryptocurrency security depends on several layers of protection. Investors can reduce avoidable risks by understanding the tools available on their exchange accounts and preparing for unexpected security events.

• Use strong authentication. Enable an authenticator app, security key, or phishing-resistant passkey where available. Avoid relying exclusively on passwords.

• Verify security alerts independently. Access the exchange through its official application or a previously saved website address rather than following links in unexpected messages.

• Know how to secure a compromised account. Familiarize yourself with account-locking tools, session management, withdrawal controls, and official support procedures before an incident occurs.

• Review withdrawal protections. Where supported, consider address allowlists, withdrawal confirmations, and additional approval steps for sensitive account changes.

• Follow verified incident updates. During a major security event, rely on authenticated platform announcements and reputable independent reporting rather than unverified social media claims.

• Avoid panic transfers. Do not move cryptocurrency to addresses supplied in unsolicited messages claiming to represent exchange support. Verify any instructions independently.

• Understand reserve disclosures. Proof of reserves can contribute to transparency but should be evaluated alongside other information about custody, liabilities, and operational safeguards.

• Keep records of suspicious activity. Preserve relevant transaction identifiers, notifications, and support correspondence. Avoid sharing passwords, recovery phrases, or authentication codes.

• Evaluate security improvements after incidents. Consider the quality of communication, remediation measures, independent assessments, and any applicable compensation procedures.

• Maintain a personal security plan. Review account settings periodically and ensure that recovery methods remain accessible and secure.

For investors who primarily use centralized exchanges, these precautions can help reduce security risks without sacrificing the convenience of exchange-based trading. However, the level of protection also depends on the platform itself. Security features, custody arrangements, and transparency practices vary across exchanges, making it important to compare available options before choosing where to trade and hold digital assets.

The table below compares popular cryptocurrency exchanges to help investors assess their features and make a more informed choice.

Data sources and methodology

• Financial Conduct Authority (2025; updated 2026). Cryptoassets Consumer Research 2025.

• Financial Conduct Authority / YouGov (2025). Cryptoassets Consumer Research 2025 – Full Report.

• EY-Parthenon and Coinbase (2026). Institutional Investor Digital Assets Survey.

• TRM Labs (2026). H1 2026 Crypto Hacks Reach Record High as Losses Fall Below USD 1 Billion.

• Chainalysis (2026). 2025 Crypto Theft Reaches $3.4 Billion.

• International Organization of Securities Commissions (2023). Policy Recommendations for Crypto and Digital Asset Markets.

• Public Company Accounting Oversight Board (2023). Exercise Caution With Third-Party Verification/Proof of Reserve Reports.

• Financial Stability Board (2023). High-level Recommendations for the Regulation, Supervision and Oversight of Crypto-asset Activities and Markets.

• Kahneman, D., and Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk.

• IdSurvey. CAWI Methodology.

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Team that worked on the article

Anastasiia Chabaniuk

Educational Content Editor

Anastasiia has 17 years of experience in finance and content marketing. She believes that the support of information and expert opinion is very important for the success of investors and new traders.

Learn about our editorial policies

Ciaran Ryan

Editor at Traders Union

Ciaran Ryan is a veteran financial journalist based in South Africa, where he covers cryptocurrency, mining, stock markets, and governance for Moneyweb. He also hosts the weekly Moneyweb Crypto Podcast.

Chinmay Soni

Head of Fact-Checking Department

Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data.