The world's largest crypto exchange Binance temporarily paused Bitcoin withdrawals in response to a "stuck transaction causing a backlog." The most popular token fell to the lowest in about 18 months following a sharp rise in US inflation.
Binance Freezes Bitcoin Withdrawals Following Celsius
The move came right after the crypto lender Celsius announced pausing all account withdrawals and transfers amid "extreme market conditions." Furthermore, Celsius Network's digital token, CEL, plunged nearly 50% late Sunday.
Binance CEO Changpeng Zhao said the funds are "SAFU", referring to the Secure Asset Fund for Users insurance the exchange added four years ago. Comprising Binance coin, Binance USD and Bitcoin, the fund was valued at $1 billion in January. However, the crypto crash means that it's worth substantially less today.
A Binance blog post explained that the issue was "due to an earlier batch of transactions getting stuck from low transaction fees submitted and hence, resulting in a backlog of Bitcoin network withdrawals. The Binance team is working on a solution to resume Bitcoin network withdrawals soon."
Meanwhile, Binance added that users could still trade in other cryptocurrencies and withdraw Bitcoin on other networks.
Zhao initially tweeted that the team would fix the issue in less than 30 minutes. However, he later clarified that it might take longer. After more than three hours of paused transactions, Binance announced resuming Bitcoin withdrawals.
Also, the announcement came amid a steep sell-off in cryptocurrencies. Apart from Bitcoin and Ether, most cryptocurrencies have plummeted hard in the crash. Notably, Terra's collapse last month was dire enough to catch the attention of regulators.
Bitcoin has tumbled as much as 17% in under 24 hours and is down more than 49% this year. At the time of writing, Bitcoin is down 67.25% compared to its all-time high. According to CoinMarketCap, the global crypto market cap has plummeted to $1 trillion, which is a 20% drop for the week.
How Are Other Crypto Exchanges Faring?
While Bitcoin trading activity seems to be restored on Binance, user withdrawals are still frozen on Celsius since Sunday. Celsius announced such actions would put it "in a better position to honor, over time, its withdrawal obligations." As of now, Celsius has not indicated as to if or when users can withdraw their assets.
Many on social media are waiting for other crypto lending platforms and crypto exchanges to follow suit. Some have raised concerns about Coinbase going offline amid market volatility or announcing the suspension of withdrawals. With roughly 98 million verified users and its given history of outages, it is highly probable.
While not announcing any similar actions on withdrawals, US-based crypto exchange Kraken reported funding delay in some tokens. In March, the exchange enabled users to withdraw funds using the Lightning Network. As of now, Kraken's Bitcoin on-chain and Lightning withdrawals are "fully operational" amid the market volatility.