Definition
CEX stands for centralized exchange, a type of cryptocurrency trading venue operated by a company that sits between buyers and sellers. On a CEX, users typically deposit funds into accounts controlled by the exchange, which then records balances and processes trades on its internal systems. The exchange manages the order book, matches trades, and often holds both crypto and fiat assets on behalf of its users.
As a concept, a CEX contrasts with fully on-chain trading environments because most activity occurs within the exchange’s own databases rather than directly on a blockchain. The operator sets listing rules, fee structures, and risk controls, and may offer additional trading products such as futures or perpetual futures. Since the exchange is an intermediary, it has visibility into user orders, which is relevant to concerns about practices like front-running or sandwich attacks in broader trading discussions.
Context and Usage
In trading contexts, a CEX is often the primary venue where market participants access spot markets and various derivatives, including futures and perpetual futures. Users rely on the exchange’s interface and matching engine to place different order types, such as a stop-loss order, while the exchange’s systems handle execution details. Because the operator controls the trading infrastructure, questions about fairness, transparency, and protection against behaviors like front-running are central to how a CEX is evaluated.
The term CEX is used broadly to describe both large global platforms and smaller regional exchanges that share the same centralized operating model. It emphasizes that custody, order management, and settlement logic are concentrated under a single organization rather than distributed across independent nodes. This centralization shapes how risks, responsibilities, and regulatory obligations are allocated in the crypto trading ecosystem.