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Binance Restricts Crypto Withdrawals: Is There A Hope This Will Stop?

CryptocurrencyFeb 24, 2021 09:30AM ET
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Binance Restricts Crypto Withdrawals: Is There A Hope This Will Stop?

  • Binance suspends Ethereum and ERC-20 token withdrawals.
  • Ethereum based tokens were temporarily suspended citing high network congestion as the reason for the suspension.
  • Binance suspending Ether withdrawals has become a regular occurrence on the platform, proving frustrating for traders.
  • User Funds were placed in SAFU (Secure Asset Fund For Users).

The world’s largest cryptocurrency exchange Binance announced the temporary suspension of withdrawals of Ethereum and Ethereum based tokens. The reason for the temporary suspension was stated on their official Twitter account as being due to high network congestions.

These sorts of suspensions have become commonplace on Binance and have become a major source of concern for users on the platform.

Regular Suspension of Withdrawals, A Worrisome Trend

In the evening of February 22, 2021, Binance announced via its Twitter handle that it had temporarily suspended the withdrawal of Ethereum and Ethereum based tokens because of high network congestion. Binance CEO, Changpeng Zhao reaffirmed the congestion saying that gas exceeded over 1200 during the last congestion.

This delay in withdrawals saw 151,009 pending transactions costing users of the platform grave inconveniences. However, Binance reassured users that their funds are SAFU (Secure Asset Funds For Users).

Asides from the fact that funds were safe, Binance faced heavy criticisms from its users. A certain section believes that the congestion was a move by Binance to get users to its Binance Smart Chain while others perceive the congestion as the result of exorbitant gas fees.

On The Flipside

  • Cryptocurrency, Coinbase is worth $100 billion, says Lex Sokolin.
  • Lex Sokolin, a CoinDesk columnist, is Global Fintech co-head at ConsenSys, a Brooklyn, N.Y.-based blockchain software. company, made the assertion just after Bitcoin dropped from its new peak.
  • Shortly after the peak, Bitcoin dropped by the highest ever hourly candle, causing traders to lose $2 billion in a single hour.

Is There A Way Around These Frequent Suspensions?

The regular suspension of withdrawals begs the question of whether centralized exchanges like Binance can handle the burgeoning influx of investors. These suspensions underscore the need to scale up rapidly to meet up the demand.

Another way around this debacle is to utilize liquidity aggregators to reduce bottlenecks. Aggregate can be brought together from a veritable solution involving both centralized and decentralized exchanges.

For instance, Orion Protocol has created a hybrid mix of aggregating liquidity that reduces the problem of blockchain interoperability. Aggregators will help spread the burden faced by exchanges during periods of high volume withdrawals.

Binance, The World’s Largest Cryptocurrency Exchange

Binance is a cryptocurrency exchange that provides a platform for users to trade a large variety of Crypto-currencies. By trading volume, it is the largest cryptocurrency exchange in the world with a market capitalization of over $1.5 billion.

Founded by Changpeng Zhao, the exchange announced a partnership with Israel-based Simplex to allow crypto-currency purchases to be done with Visa (NYSE:V) and other credit cards. Since its inception, Binance has been plagued by security breaches, frequent withdrawal suspensions, and regulatory suspensions yet it still proves to be the world’s most popular exchange for cryptos.

Originally founded in China, the exchange was forced to relocate its operations to China because of mounting regulatory pressure by the Chinese authorities. If Binance and other crypto exchanges like Coinbase, Gemini, Etoro, etc can fix their withdrawal issues, Cryptos will increasingly gain public acceptance from the general population.

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Binance Restricts Crypto Withdrawals: Is There A Hope This Will Stop?

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