Nested Exchange

A nested exchange is a service that operates using accounts and liquidity hosted within a larger exchange, often with weaker customer due diligence.

A nested exchange, or nested service, runs on top of a host exchange rather than holding its own banking and liquidity. Its customers deposit into addresses that ultimately clear through the host, which lets the nested operator offer trading with minimal KYC while hiding behind the host's reputation. For analytics this is a clustering challenge: entity attribution must separate the nested service's activity from the host exchange's own, since conflating them misstates the counterparty graph. Nested exchanges frequently appear in laundering flows, so a distinct on-chain label for them sharpens the exposure breakdown and any address risk score.