Key Takeaways:
- Due to the large number of pending transactions, Binance said that it had “temporarily” halted allowing BTC withdrawals.
- Binance was striving to withdraw funds through the Lightning Network, which it said would facilitate the impact of future withdrawal freezes.
On May 8, cryptocurrency exchange Binance stopped Bitcoin withdrawals for a second time, citing a huge backlog of outstanding withdrawal requests.
On May 8, due to the large number of pending transactions, Binance said that it had “temporarily” halted allowing BTC withdrawals. The statement went on to say that a significant number of BTC withdrawal transactions from the exchange had not yet been executed. It added that because its fixed costs had not taken into account the recent increase in network gas fees, the transactions were still processing.
Nearly two hours after posting its initial tweet, the exchange released an update and announced that it was replacing the pending Bitcoin withdrawal transactions with ones that would have a higher cost in order to have mining pools accept them. Binance announced that Bitcoin withdrawals had begun almost three hours after it sent its initial tweet, with pending transactions now being handled at a higher transaction charge.
Binance said that it was striving to make it possible to withdraw funds through the Lightning Network, which it said would facilitate the impact of future withdrawal freezes. In a tweet, the company stated:
“Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations.”
Binance had to briefly halt Bitcoin withdrawals earlier on May 7 due to an alleged overflow of transactions on the blockchain. Over a half-hour later, withdrawals were once again permitted.
When the second break occurred, there were close to 500,000 unconfirmed transactions, up from just under 400,000 during the first pause. It is currently slightly over 430,000 during a 12-hour period and is starting to fall.
According to statistics from CryptoQuant, Binance had large Bitcoin net negative outflows on May 7, with over 175,650 BTC worth approximately $4.95 billion leaving the exchange for the day. According to Binance, it was moving Bitcoin between its hot and cold wallets when this outflow data was recorded.
Binance has previously temporarily stopped accepting withdrawals of Bitcoin. Changpeng Zhou, the founder and CEO of Binance, tweeted in June of last year that the exchange had “paused Bitcoin withdrawals due to a stuck transaction causing a backlog.”
