What is a Centralized Exchange (CEX)?

A centralized exchange (CEX) is type of cryptocurrency trading platform that is operated by a central entity. This entity is responsible for maintaining the exchange's security, liquidity, and overall performance. Users of a centralized exchange deposit their funds into an account registered on the platform, and let the exchange facilitates the exchange of assets. Centralized exchanges most commonly exist off-chain (transactions are not processed on a blockchain), and typically require users to deposit assets into an exchange's custody.