I was just looking at topics about exchanges and found that many people are especially interested in decentralized trading platforms that don’t require identity verification. I want to talk about this in more depth.

Simply put, these are platforms that let you trade cryptocurrencies directly without submitting proof of identity. Uniswap and PancakeSwap are typical examples. Based on 2024 data, Uniswap had around 12 million monthly active users at the time, with a market share of 60%, and PancakeSwap also had nearly 2 million unique users. The main reasons these platforms attract so many people are a few.

First is privacy. In an era where monitoring and data leaks are becoming more frequent, many people do want to trade privately and don’t want their identity information held by all kinds of institutions. Second is convenience—there’s no need for lengthy verification steps, accounts are created instantly, and this kind of fast access is especially appealing to people in countries where crypto trading is restricted or who can’t access traditional financial systems. And then there’s speed: you can start trading immediately, even create multiple accounts, and there are no limits on transferring funds.

But to be honest, a lot of risks are hidden behind convenience. The decentralized anonymity attracts plenty of scammers. If there’s a code vulnerability or a hack on the platform, because there’s no central authority responsible, it’s difficult to get support. Even more serious is regulatory risk—governments in various countries are stepping up monitoring of these kinds of platforms. If your wallet address’s activity on these exchanges is traced, you may face legal trouble.

Functionally, there are also clear limitations. Platforms like Uniswap can’t directly withdraw fiat currency, and low-liquidity tokens often have very few trading pairs. Traditional bank deposits usually come with insurance protection, but these platforms do not. The UK FSCS protects up to 85,000 pounds, and the US FDIC protects up to $250,000, but decentralized exchanges offer no such safeguards. If you’re hacked or there’s a dispute, you bear the losses entirely yourself.

That’s also why these platforms are often used for money laundering. The dark web marketplace Hydra uses decentralized exchanges heavily to process illegal funds, using Bitcoin mixers to obscure the source of transactions. In 2022, the North Korean hacking group Lazarus stole over $600 million worth of ETH from Axie Infinity, and that money was laundered by routing it through the Tornado Cash mixer to decentralized exchanges. That’s also why Tornado Cash was later sanctioned and shut down by the United States.

According to data from the Internet Crime Complaint Center under the FBI, in 2023 there were more than 60,000 crypto-related fraud cases, with losses exceeding $5.6 billion. These figures are enough to show how serious the issue is.

If you really want to use platforms like this, you must do a solid job of security protection. Set an ultra-strong password, enable two-factor authentication, and use a VPN to hide your location. Most importantly, don’t keep large amounts of money in your trading account—moving funds to a hardware wallet is the right approach. Also be careful about phishing—verify URLs, check smart contract addresses, and confirm that email links are authentic.

To put it simply, the freedom and privacy of decentralized trading are enticing, but the price is the lack of protection and accountability. You can use them, but keep your eyes open and stay vigilant. This is the reality of the crypto market right now—profits and risks are often two sides of the same coin.