With the recent issue of coldcard users having their funds drained, some people are saying "move funds to exchanges to be safe". Bitcoin was not hacked, this was an issue of bad entropy. Self custody is still important, if you do not want to solely trust the hardware wallets entropy then use a strong passphrase or multisig.
The only time I had bitcoin stolen was when I used an exchange, yes even a "regulated" and Bitcoin only exchange. It was a reputable exchange also. I deposited some Bitcoin into this regulated reputable bitcoin only exchange for a house purchase only to have my funds stolen immediately upon depositing. They cited "compliance" "OFAC" reasons and stuff like that. I am not a criminal, my funds are clean. I even bought my sats from KYC exchanges, before withdrawing to self-custody than later deposited.
I will not name the exchange, but I can say that it was a popular exchange that is bitcoin only and widely marketed within the Bitcoin sphere. And if I name the exchange people would also think other exchanges are safe. This is a problem with any exchange, even regulated ones. They are either a frontend to a shady company that will steal funds and come up with excuses, or they themselves will seize funds out of regulatory compliance reasons.
YOU ARE NOT SAFE WITH EXCHANGES.
This is not a problem with Bitcoin, this is a problem with regulatory systems which bitcoin is supposed to fix.
The same thing could have happened even if I used only fiat, fiat is subjected to scrutiny and the same regulations also.
Bitcoin fixes this.
Keep transactions peer to peer directly, keep self-custody.
This is a real issue. I've seen multiple problems and horror stories with Coinbase, for example. It's just another reinforcement that not your keys, not your control.
Adding, my intent is not to spread false FUD. I am telling the truth. My intent is to warn others from giving up self-custody in thinking that is safe. I was going to just keep my mouth shut since with one of the exchanges I promised I would not name them if they re-imburse my funds back. And I am a person of my word. I do not want to see people lose funds. Regulated exchanges are not safe. Though I still will not name the exchange.
I will also add, this happened to me on two different exchanges. Both were bitcoin only, well known and reputable, and regulated. Upon depositing funds to convert to USD, my funds were frozen due to the excuse of "compliance".
When I say "frontend to a shady company", some exchanges actually are just a front-end that use an api with a seperate backend company for the transactions and conversions between BTC and fiat. The people at such companies may be well intended, but they might be using a backend company that is the problem. Even if they do everything themselves they are still subjected to gov regulations and can freeze (seize) your funds for compliance reasons. With AML you are guilty unless you can prove innocence which is impossible on bitcoin due to transactions not being trackable, especially if you ever used layer 2 at all.