30 Indian Minds Leading the AI Revolution

Binance halts BTC withdrawals, CZ says funds are Secured Asset Fund for Users

Binance paused its Bitcoin transactions on Monday for more than three hours over technical issues

Published: Jun 15, 2022 06:57:13 PM IST

Image: Shutterstock

Binance, one of the world’s premier cryptocurrency exchanges, paused its Bitcoin withdrawals this Monday because of a ‘stuck on-chain transaction’.

The crypto exchange platform resumed withdrawals after 11:30 am EST (9:00 pm, IST), which was some three and a half hours after the CEO of Binance, CZ, Changpeng Zhao, tweeted that the issue would be fixed in around 30 minutes. Shortly after, he followed up, saying that the fix would take “a bit longer” than the initial estimate.

Binance stated it was “still working to process the pending Bitcoin (BTC) network withdrawals” over the next hours. The pending withdrawals were rejected during that period. Thus, Binance advised the customers to resubmit their orders once the issue was fixed.

Binance also advised its users to use other networks to withdraw their Bitcoin, including their own BNB network and Ethereum, since those blockchains did not face any such issue and were functional. According to some experts, integrating Bitcoin’s Lightning Network would have helped avoid the issue. Despite its global reach and size, Binance lags behind other crypto exchanges on the Lightning Network integration.

CZ also mentioned in his tweet that the funds were ‘SAFU’, which refers to Binance’s trading protection fund, Secure Asset Fund for Users (SAFU). The term was popularised in 2018 via youtube. It is a play on the word ‘safe’.

This is not the first time Binance had to suspend its user activity or experience downtime. Binance has also announced that users will not be able to deposit or withdraw Litecoin using the newly added feature protocol, MimbleWimble Extension Blocks. The new protocol enables confidential and anonymous transactions using the crypto asset.

Last month, the exchange platform put the transactions of both Terra’s LUNA and UST on hold for three days as both coins collapsed. The market cap of LUNA declined by about 97 percent, from $236 million to approximately $11.5 billion, as indicated by CoinMarketCap’s data.

This is not the end of the list. In November 2021, Binance paused withdrawals for all crypto assets due to the accumulation of transactions in its backlog. The network resumed transactions after about a half-hour.

However, this time, the issue arose as a ‘batch of transactions’ could not be processed using Bitcoin, Binance said in its statement. The transactions were stuck as they were submitted using ‘low transaction fees’. This resulted in the accumulation of transactions, creating a backlog of Bitcoin withdrawals, as the company stated in one of its blog posts on its official website.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash