everything happens on exchange excecpt withdrawals are just numbers game.

you deposit x btc to your deposit wallet,
exchange see those x btc added and gives you x btc to play with .

you sell those x btc to another user.
exchange removes those x btc from your account and adds those x btc in who have purchased your btc.

this is all done in internal database.

the only time person withdrwas their coins , is when they create a transaction and broadcast/push to the the specific blockchain network/nodes.

so you can seee its , just numbers game for them.