Binance Pauses Bitcoin Withdrawals Amid Crypto Sell-off

Souvenir tokens representing cryptocurrency Bitcoin plunge into water, on May 17, 2022. Dado Ruvic/Illustration/Reuters

Crypto firm Binance paused withdrawals of Bitcoin (BTC) on Monday, claiming that a technical issue had left the company unable to process withdrawals as the crypto market suffered from a large-scale sell-off, bringing the value of Bitcoin to an 18-month low.

Binance said that the issue was attributable to a “stuck on-chain reaction,” which prevented Bitcoin withdrawals from being processed on the company’s servers.

“A batch of $BTC transactions got stuck due to low TX [transaction] fees, resulting in a backlog of BTC network withdrawals,” the company said in a tweet. “As a result, withdrawals on the Bitcoin network are temporarily suspended on Binance.”

Binance CEO Changpeng Zhao addressed the issue in a tweet sent at 8:00 a.m. EDT on Monday, blaming the pause on a “stuck transaction causing a backlog.” He initially estimated that it would take about 30 minutes to fix the problem, but after several minutes posted a reply noting that it would likely take longer to fix than his initial estimate.

The issue was apparently rectified by 11:32 a.m. EDT, allowing Binance users to trade Bitcoin once again.

Similarly, crypto firm Celsius also halted trading on Sunday, not out of any apparent technical difficulty but rather “in order to stabilize liquidity and operations,” according to the company, which claimed that the suspension of activity was permitted by a clause in its Terms of Use.

“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts,” the company said in a statement. “We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”

The pause in Bitcoin transactions from both companies comes as the flagship cryptocurrency plummets to its lowest levels since December 2020, erasing billions of dollars in value from Bitcoin’s market cap, after an already punishing year for the blockchain token. The market carnage was seen in other cryptocurrencies such as Ether, which fell by more than 15 percent on Monday.

Throughout recent years, proponents of cryptocurrency have hoped that assets such as Bitcoin could serve as a hedge against inflation, as the scarcity of such cryptocurrencies would cause them to appreciate in value as demand continued to grow. However, these hopes have not been borne out this year, as leading cryptocurrencies have shed billions of dollars in value even as the U.S. dollar’s record inflation continues month-to-month.