IDAX 'exit scam' shows the problem with exchange centralization

The disappearance of the CEO of Chinese crypto exchange IDAX shed a light on the ever-growing problem of crypto exchange centralization.

Missing CEO puts the entire crypto exchange in jeopardy.

The crypto industry was shaken earlier this week when news about a possible exit scam began surfacing on social media.

Triggered by withdrawal problems that stemmed from last week, users of Chinese cryptocurrency exchange IDAX quickly began to suspect foul play was at hand.

Days later the exchange issued an urgent announcement, saying that its CEO has "Gone missing" without explanation and has not had contact with anyone at IDAX since Nov. 26.

While many reports focused on uncovering the connection between China's recent crypto exchange ban and the disappearance of IDAx's chief executive, the situation is much more indicative of a bigger problem in the crypto industry.

Most crypto users enter the market through large, well-known exchanges, risking their security and the security of their funds for a friendly user interface.

With recognizable faces at the heads of these companies and a business model that resembles that of a traditional financial institution, these exchanges are extremely popular with crypto users.

Take the example of QuadrigaCX, the largest cryptocurrency exchange in Canada, whose extremely centralized structure led to the loss of over $150 million in investor funds and the ultimate closure of the exchange.

To avoid pointing any more fingers, almost every cryptocurrency exchange is guilty of centralization.