The FUD grows as the world’s largest cryptocurrency exchange, Binance, halts Bitcoin (BTC) withdrawals for the second time in less than a day due to massive outflows from the exchange.
On Monday morning, May 8th, Binance’s official Twitter account announced that it had halted Bitcoin[BTC] withdrawals due to a large backlog of pending withdrawals. The exchange announced:
“We’ve temporarily closed #BTC withdrawals due to the large volume of pending transactions. Our team is currently working on a fix and will reopen $BTC withdrawals as soon as possible.”
We've temporarily closed #BTC withdrawals due to the large volume of pending transactions.
Our team is currently working on a fix and will reopen $BTC withdrawals as soon as possible.
Rest assured, funds are SAFU.
— Binance (@binance) May 8, 2023
According to Binance, a large number of withdrawal transactions were pending as their “set fees did not anticipate the recent surge in $BTC network gas fees.” The exchange management said they were working on a fix by “replacing the pending $BTC withdrawal transactions with a higher fee so that they get picked up by mining pools.”
About 40 minutes later, the team returned to announce the reopening of withdrawals with higher transaction fees. As of writing, the withdrawal activity has been restored.
Earlier on Sunday, May 7th, Binance temporarily suspended Bitcoin withdrawals, citing a network congestion issue. It reopened withdrawals over an hour and a half later.
The FUD Grows
Although normal operations have been restored, the event was enough to raise some eyebrows in the industry. The renowned crypto trader that goes by the Twitter name “The Wolf” was the first to take notice of the situation.
While Binance claimed a network issue, “The Wolf” suspected something more serious. According to him, massive withdrawals from the exchange along with the plummeting price of Bitcoin (BTC) is a “big red flag” as“this sort of behavior happens during insolvency / legal risk.”
Billions of dollars have been withdrawn from Binance while the price of Bitcoin continues to plummet.
This is a big red flag. This sort of behavior happens during insolvency / legal risk.
To top it all off, withdrawals have stopped TWICE.
Play it safe and self-custody for now. pic.twitter.com/bcZ4MWfH7X
— The Wolf (@WolfOfPoloniex) May 8, 2023
He doubted that if it was indeed only a panic sell-off due to network congestion, why only Binance was experiencing massive withdrawals. He wrote:
“Massive withdrawals on Binance. This is not normal. This does not look right. I can’t explain it, but it needs to be tracked by investors until it goes back to normal. If this truly were a only a ‘panic sell off’ due to BTC’s congestion, then why is only Binance experiencing massive withdrawals…? Something seems fishy. Follow the whales. Practice risk management.”
According to WhaleWire, the exchange is on the verge of collapse as it has experienced the largest withdrawal in its history, as “162,000 $BTC has left the exchange, valued at over $4.6 billion.”
Something very suspicious is going on with #Binance right now:
🐳 Largest outflow ever, over $4.6B mysteriously exited by Whales.
❌ Binance halts all $BTC withdrawals 3 times today, offline for several hours.
📉 #Bitcoin volume plunging over -65% in last 30 days.
— WhaleWire (@WhaleWire) May 8, 2023
The crypto insight platform claimed that someone had DMed it about an SEC action against Binance. It wrote:
“I tweeted the news that #Binance halted #Bitcoin withdrawals, and a moon boy DMed me, begging me to delete it, and said the SEC was going to take me down for market manipulation.”
Apparently sharing facts is illegal now. Gotta love moon boys! Lmao!
— WhaleWire (@WhaleWire) May 8, 2023