- Binance is a leading cryptocurrency exchange platform with millions of users across the world
- The platform suspended the withdrawal of Bitcoin twice in 12 hours on May 8 raising questions
- Binance has said they temporarily closed BTC withdrawals due to a “large volume of pending transactions”
Binance, a cryptocurrency exchange, suspended Bitcoin withdrawals for the second time on May 8, claiming a huge backlog of pending withdrawals.
Binance announced on May 8 that it had “temporarily” suspended BTC withdrawals due to a “large volume of pending transactions.”
The transactions were still pending, according to the company, since its “set fees did not anticipate the recent surge in [Bitcoin] network gas fees.”
Almost two hours after its initial tweet, the exchange released an update. Stating that it was “replacing the pending [Bitcoin] withdrawal transactions with a higher fee so that they get picked up by mining pools.”
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Over three hours after its original tweet, Binance announced that it had begun Bitcoin withdrawals, stating that it was processing pending transactions at higher transaction fees.
It also stated that it was working on facilitating withdrawals via the Lightning Network. This, it claimed might help alleviate future withdrawal halts.
Binance had to briefly prohibit Bitcoin withdrawals earlier on May 7, citing an overflow of transactions on the blockchain. It reopened withdrawals after about an hour and a half.
At the time, roughly 400,000 transactions were waiting to be processed in the Bitcoin mempool. According to mempool.space data, this had increased to approximately 485,000 at the time of Binance’s second withdrawal halt. Each blockchain node validates transactions in a mempool, which is a place on the Bitcoin network where transactions “wait”.
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According to CryptoQuant statistics, Binance had large Bitcoin net negative withdrawals on May 7. This is with roughly 175,650 BTC worth around $4.95 billion leaving the exchange that day.
Binance claimed that the exchange of Bitcoin between its hot and cold wallets caused the outflow of data. According to Cointelegraph data, the price of Bitcoin has also dropped roughly 3.5% from its weekly high of almost $29,700 on May 6.
Binance investigation
Just three days after Bloomberg reported that the US Department of Justice (DOJ) national security division is investigating Binance, the Bitcoin halt occurred.
This is for allowing Russians to use the cryptocurrency exchange in breach of US sanctions. The authorities have not leveled any charges against the corporation or its executives in conjunction with the probe.
The national security inquiry is combined with a criminal division investigation. This is according to the news service, which cited five unnamed sources. Binance is the subject of various investigations in the United States, including a Department of Justice (DOJ) investigation investigating anti-money laundering (AML) offences.
Binance restricted services to Russia when the country was sanctioned in April 2022. Nonetheless, it continued to operate there, according to a report by Cointelegraph. This is while restricting only sections of Ukraine that were no longer under government control and serving only non-sanctioned persons.
Binance is not the only cryptocurrency exchange under investigation for sanctions violations. According to a May 1 release, Poloniex paid a $7.6 million settlement to the US Treasury Department’s Office of Foreign Asset Control for violating sanctions against Crimea, Cuba, Iran, Sudan, and Syria.
