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11.August 2022

Crypto Reacts: Binance Pauses BTC Withdrawals, Is CZ Lying?

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It has been a heated start of the week for the crypto community. Crypto exchange Binance temporarily suspended withdrawals on the Bitcoin network. This happened the same day as Celsius halted all withdrawals, raising liquidity concerns. Naturally, many users started to worry about Binance as well.

In the middle of Bitcoin’s 13% drop, the crypto exchange Binance announced they would be temporarily pausing BTC transactions on the Bitcoin network “due to a stuck transaction causing a backlog.” Withdrawals through other networks like Ethereum or BNB Chain were still available. 

Although CEO Changpeng Zhao expected this to last half an hour, it took the exchange 3 hours to solve the issue, which gave a lot of time for conspiracy theories to come out.

The times are tense. Not only because of the dropping prices during this ferocious bear market but also because of the terraUSD’s meltdown and the Celsius news. The crypto community is being extra wary of any other possible shams.

Here are some of the conspiracy theories that spread out:

UC-Berkeley’s Nicholas Weaver tweeted: “Binance halting withdraws (rather than trading) makes me wonder if they are either insolvent or just run out of liquidity and need to raid the cold storage. I wonder which case it could be?”

“Not sure why no one has mentioned this, but Bitcoin doesn’t work like that – it’s not like Ethereum where transactions require an iterative nonce – you can spend inputs even if a transaction from the same address is stuck in the mempool. Some additional clarity would be nice…

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