Commingling and Rehypothecation
Customer assets are pooled and reused, lent, posted as collateral, or traded, so the same units back more than one obligation at once.
How it happens
Absent a segregation rule, a venue or lender can hold customer assets in omnibus wallets and treat them as balance-sheet resources, funding yield programs, lending to affiliates, or posting collateral at other venues. Customers frequently authorize this in the terms without registering what they have agreed to, particularly in products marketed as earning a return. The result is a chain in which one set of coins supports several claims, and a default anywhere in the chain propagates back to depositors who believed they held the asset itself. The same behavior also makes proof-of-reserves exercises unreliable, since assets present at a snapshot may be borrowed and the liabilities against them may not be shown.
What you can actually observe
Read the custody and yield terms for language granting the venue the right to use, lend, or pledge assets. Ask whether balances are held in named or omnibus wallets and whether any regulator requires segregation for that entity. On-chain, look for regular movement between exchange-labeled addresses and affiliate or lender addresses, and check whether any proof-of-reserves exercise covers liabilities and was performed by an independent party.
Precedent
FTX transferred customer assets to its affiliated trading firm Alameda Research, and the 2022 failures of Celsius, Voyager, and BlockFi each involved customer deposits that had been lent onward.
What makes it more or less material
Consider whether the terms authorize reuse, whether segregation is legally required and supervised, whether any yield is offered on deposits, and whether affiliate relationships are disclosed.