Literally the same concept if you are translating it to dollar bills and banks. But with crypto, there’s never a reason to use a centralized exchange besides laziness and ignorance. It’s just as easy to store your belongings on your own thumb drive that only you have access to. All of the crypto brokers are scams, even when they don’t realize it. They don’t think their job is to back client assets 1:1, but instead to use client money to grow the business and hope their collateral always covers their margin even though they deal with highly volatile products not backed by anything of actual value.

"I live a good life but a pretty simply life. I just store all my money under my mattress. My wife and I travel, and I bought my dream car, the Cobra." - Aaron Paul