Binance halts bitcoin withdrawals twice in half a day amid build-up of unprocessed transactions

Binance, the world’s largest cryptocurrency exchange, paused bitcoin withdrawals twice within 12 hours, citing a backlog of unprocessed transactions.

“There is a large volume of withdrawal transactions from Binance still pending,” the company wrote in a Twitter post on Monday morning, adding that the issue occurred because it failed to pay crypto miners sufficient fees to process transactions on the blockchain.

“Our set fees did not anticipate the recent surge in [bitcoin] network gas fees,” Binance tweeted. “We’re replacing the pending [bitcoin] withdrawal transactions with a higher fee so that they get picked up by mining pools.”

Binance resumed bitcoin withdrawals around two and a half hours later, and said it had adjusted its fees to prevent similar occurrences in the future.

“This is a learning opportunity for us and we’ll do our best to prevent this from happening again,” the exchange tweeted.

The service suspension came after Binance halted bitcoin withdrawals for about an hour on Sunday evening due to “a congestion issue”. In March, the company also temporarily shut down spot trading, deposits and withdrawals, citing a technical glitch.

Bitcoin was trading above US$27,900 on Monday afternoon, after retreating from a 10-month high of over US$30,500 in mid-April.

As the dominant player in the global digital asset market, Binance was responsible for 92 per cent of the world’s bitcoin spot trading volume as of the end of 2022, according to Arcane Research.

Founded by Zhao Changpeng in Hong Kong in 2017, Binance has seen a meteoric rise internationally following mainland China’s decision to crack down on domestic cryptocurrency trading.

Amid growing regulatory scrutiny of the global crypto industry, Binance and Zhao are being sued by the US Commodity Futures Trading Commission (CFTC) for operating an “illegal” exchange and a “sham” compliance programme.

“For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance,” CFTC chairman Rostin Behnam said in a statement in March.

The US Department of Justice has been investigating Binance since 2018 for possible money-laundering and sanctions violations, according to a Reuters report in December.

Last month, Australia’s securities regulator cancelled Binance’s licence for its derivatives business in the country, while its spot platform remains open.