- Binance exchange temporarily closed Bitcoin withdrawals on May 7, citing BTC network congestion.
- The clogging caused delays with many transactions pending, and the fees soared.
- The exchange assured users of the safety of funds before resuming two hours later.
- OKX exchange leveraged the incident, and the meme trend continues with a significant drop in PEPE.
Binance, the largest exchange by trading volume, announced that they had paused Bitcoin (BTC) withdrawals on Sunday, May 7, 2023, at 6:07 PM EAT, citing congestion issues on the Bitcoin network.
We've temporarily closed $BTC withdrawals as the #Bitcoin network is experiencing a congestion issue.— Binance (@binance) May 7, 2023
Our team is currently working on a fix until the network is stabilized and will reopen $BTC withdrawals as soon as possible.
Rest assured, funds are SAFU.
Binance Bitcoin network congestion incident on May 7
Based on the details of the announcement, the exchange paused Bitcoin withdrawals because of issues on the BTC network, saying that they were experiencing congestion. Nevertheless, the exchange, led by CEO Changpeng Zhao (CZ), assured that the team worked to fix the problem until the network stabilized. They also reassured the community that the funds were SAFU and the withdrawals would be re-opened immediately.
Notably, this is not the first time Binance has complained about network congestion on the Bitcoin network and halted withdrawals. In June 2022, CZ tweeted that the platform had temporarily "paused Bitcoin withdrawals due to a stuck transaction causing a backlog."
OKX exchange uses the downtime to its advantage
While Binance suspended BTC withdrawals, OKX exchange seized the opportunity to market itself, noting that deposit and withdrawal services on the exchange were fine.
#BTC deposit and withdrawal services on #OKX are running fine. On chain transaction fee is currently high but our transactions are going through fine.— OKX (@okx) May 7, 2023
Protip: If you want to save a few bucks, please use the lightning ⚡network. pic.twitter.com/VR2SUB6xXg
Based on the post, the exchange acknowledged high transaction fees, calling users' attention to the lightning network for more affordable rates.
The incident caught the attention of the head of Firmwide Research at Galaxy Digital New York, Alex Thorne, who congratulated the OKX exchange while calling attention to the high-fee environment on the Bitcoin network. In his opinion, it is time for more engineering.
the #bitcoin network is completely stable. blockspace is currently expensive and you apparently haven’t spent the time to prepare for a high-fee environment on bitcoin, with batching, lightning implementations, or just good fee estimation for your users. time to do some basic…— Alex Thorn (@intangiblecoins) May 7, 2023
Some users have attributed the issue to a regulatory premonition or that the suspension was deliberate as the exchange tried to manoeuvre around a small profit margin because of the high transaction fees. On this note, the user said that Binance may have closed and gated re-opened withdrawals when the fees were lower. Either way, the user calls the move a "disingenuous and suspicious excuse.
If it isn't a regulatory premonition, my guess is the higher fee means too small profit margin, so they'll close or gate re-opening withdrawals when the fees are 'x'% lower.— BITCOIN-Affirming Gordon Freeman (@CryptoSatireMan) May 7, 2023
Either way it's a disingenuous excuse and sus.
Crypto market updates
At the time of writing, Bitcoin (BTC) price is $28,943, down 0.3% in the last hour but up 0.38% in the last day. The global crypto market cap stood at $1.19 trillion, a 0.55% increase over the last 24 hours. Still, meme coins continued trending, with Dogecoin (DOGE) price recording a 0.2% increase daily. On the downside, Pepe (PEPE) coin has plunged a staggering 5.07% decline in the last 24 hours.
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