What Is the Primary Risk of Leaving Crypto on a Centralized Exchange?

The primary risk is the lack of control over your private keys, leading to counterparty risk. If the exchange is hacked, becomes insolvent, or faces regulatory action, your funds can be frozen or lost entirely.

You are an unsecured creditor, not the direct owner of the funds held by the exchange. This is why the "not your keys, not your coin" principle is crucial for exchange users.