Suspended Binance withdrawals: What happened and why?

Binance cited technical glitches while others blamed the market downturn. Will it happen again?

Binance logo made of gold numbers, against black and gold background                                 
Binance is the world’s leading centralised exchange – Photo: Shutterstock
                                

Contents

Suspended Binance withdrawals: Stuck transactions blamed

During the trading day of 13 June, as Bitcoin (BTC) seemed hellbent on ducking below the $20,000 mark for the first time since December 2020, the world’s largest crypto exchange Binance suspended withdrawals of Bitcoin for a number of hours. Binance chief executive officer Changpeng “CZ” Zhao swiftly took to Twitter to explain that “stuck” transactions were causing a backlog.

The decision was initially confirmed at 13:18 BST (UTC +1). A little over three hours later, Binance withdrawals had resumed. In a brief post mortem of the incident, Binance pointed the blame at delayed transactions following a minor hardware failure causing a build up, compounded by inaccurate gas fee readings when the pending transactions were processed.

The temporary ban came on a day of high drama for the crypto market, which saw prominent lending platform Celsius put a similar freeze on withdrawals of its $3.4bn in held assets. Bitcoin reacted by falling to its lowest price since December 2020. Meanwhile, the entire crypto market capitalisation dipped below the $1trn mark for the first time since January 2021.

Despite the official explanation, Binance’s temporary ban on Bitcoin redemptions came during Bitcoin’s worst moment in 2022. Consequently, Binance’s assurances aside, major news outlets including The Telegraph, The Financial Times and The Times framed the occurrence as a direct consequence of sliding market conditions.

Will Binance ban Bitcoin redemptions again?

Can it happen again? Absolutely. Will it happen again? That depends. If we take the official party line at face value, then a simple technical hiccup is nothing to worry about. There is clear evidence that Binance’s explanation checks out, since Bitcoin was still withdrawable on networks outside of Bitcoin (for example, Ethereum and BNB Chain), suggesting that liquidity was still there. Furthermore, Binance disclosed all suspended withdrawals before quickly dislodging them.

But that is not to say that Binance, or another major centralised exchange, will not be forced to ban Bitcoin redemptions for more serious reasons in the future, namely a lack of liquidity. It has, in fact, happened before. Once the largest global Bitcoin exchange, the doomed Mt Gox centralised exchange suspended trades on 11 and 12 April 2013 for this very reason. Mt Gox went bankrupt the following year.

Mt Gox was straightforward in its reason for suspending trades, citing, simply, “market cooldown”. Despite 2013 being a landmark year for Bitcoin, April saw a temporary crash from above $200 to less than half of that figure.

Graph of Bitcoin’s trading performance in 2013
April downturn aside, 2013 was a turning point for Bitcoin – Source: bbc.co.uk

Thankfully, crypto exchanges are significantly more sophisticated today than they were in 2013. The volatility experienced in 2022 – from Terra’s collapse to Celsius’ ongoing situation, by way of a crushing bear market – could prove to be a stress test for the centralised exchanges. To stay updated on all things Binance, stay tuned to Currency.com.

FAQs

Can Binance suspend withdrawals?

Yes, Binance can and has suspended withdrawals, most recently on 13 June 2022 following what Binance claimed was an issue with “stuck” transactions.

Are withdrawals suspended only for Bitcoin on Binance?

Yes, only Bitcoin was affected by Binance’s suspension. The suspension lasted a total of three hours and all pending transactions were eventually processed.

How long does a Binance withdrawal usually take?

According to Binance, it takes between 30-60 minutes to withdraw cryptocurrency from Binance to a destination wallet. Fiat withdrawals are instant.

What are Binance withdrawal fees for Bitcoin?

Binance withdrawal fees depend on the token that you are withdrawing and the blockchain network that you are using. An up-to-date list can be found on Binance’s official website. Binance withdrawal limits vary from token to token.

Further reading

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image