Coinbase and Kraken Record Service Failures Amid Market Crisis
Sequel to the ongoing turbulence within the crypto market, some leading centralized crypto exchanges like Coinbase and Kraken recorded intermittent service failure as per a post.
BREAKING: Coinbase is DOWN! Several services are down right now.
Now y’all seeing real bear market dealings 🩸
— MASON VERSLUIS 🏆🔮 (@MasonVersluis) November 8, 2022
The temporary service interruption was associated with an increase in the volume of new user registrations, along with an increase in transactions. In the meantime, there appears to be relative stability in the services of the two affected platforms.
Recall that the centralized exchange FTX has been struggling with a liquidity crisis, which prompted its CEO, Sam Bankman-Fried (SBF), to strike a deal with Binance for temporary relief from the liquidity crisis.
Speaking on the temporary service timeout, Coinbase remarked that the exchange truly had network connection issues relating to its three platforms: Coinbase.com, Coinbase Pro, and Coinbase Prime.
We’ve implemented a fix and latency has improved dramatically. Due to the high level of new user sign-ups and transfers to Coinbase today, some customers had trouble signing up / experienced delays signing in. https://t.co/IcA6wtZz1N
— Coinbase Support (@CoinbaseSupport) November 8, 2022
On the other hand, Kraken centralized exchange fails to comment on the service outage complained about by its users. Although the exchange seized the aura to assure its users that it has proof-of-reserves audits.
🚨Check if the exchange you’re using undergoes Proof of Reserves audits.
ICYMI: Kraken is committed to regular audits – enabling you to verify the balances you hold on our exchange are backed by real assets 🤝
Don’t trust, verify your balance now ⤵️
— Kraken Exchange (@krakenfx) November 8, 2022
The proof-of-reserves audits enable users to ascertain balances held on the exchange vis-a-vis backed assets. It is noteworthy that the abysmal proof-of-reserves of FTX.com led to its liquidity crisis.
CEX to Learn from FTX Liquidity Crisis
There is no mincing word that the current crisis rocking FTX.com exchange will serve as a lesson for a centralized crypto exchanges.
As a result of the occurrence, Binance CEO Changpeng Zhao identified two major lessons to be learned from this crisis; first, exchanges should not use a personally created token as collateral. Secondly, it is not advisable to borrow money to operate a cryptocurrency business.
Two big lessons:
1: Never use a token you created as collateral.
2: Don’t borrow if you run a crypto business. Don't use capital "efficiently". Have a large reserve.
Binance has never used BNB for collateral, and we have never taken on debt.
— CZ 🔶 Binance (@cz_binance) November 8, 2022
Zhao further added that Binance had added $1 billion to its insurance fund in order to assuage the ongoing price fluctuations.
To adjust to recent price fluctuations, #Binance has topped up the #SAFU insurance fund to $1 billion USD equivalent again.
BUSD AND BNB address about 700m: https://t.co/OMoB6HeR6r
BTC address 300m: https://t.co/6kOJ1MZhMM
— CZ 🔶 Binance (@cz_binance) November 9, 2022