Binance, the world’s largest crypto exchange, twice suspended and then resumed withdrawals of all currency on its website on Monday, raising questions about whether it is acting more like a casino than a currency exchange and selling more crypto than it has access to.
Citing a large backlog in withdrawal processing, Binance announced the first withdrawal suspension at 7:37 a.m. Monday. It tweeted 25 minutes later that withdrawals had resumed. Then it announced the second suspension a half-hour later, then tweeted at 9:48 a.m. that withdrawals had resumed again.
“Thank you for your patience, and we apologize for any inconvenience caused,” Binance tweeted.
“Then why can I still not withdraw seven + hours later?????” @dannikatttt asked.
A Binance spokesperson told MarketWatch in an email that the suspension was due to “a database system issue” that affected the exchange’s withdrawal service. “At no times were users funds at risk,” the spokesperson wrote.
Not everyone is buying the backlog or no-risk explanations.
Take Gavin Lucas, who describes himself in his Coingeek bio as a fan of bitcoin and “all thing BSV” (BSV is an acronym for the native cryptocurrency of the Bitcoin SV blockchain.)
Lucas accuses Binance CEO Changpeng Zhao and others of “promoting misleading ideas about decentralization, permissionless access to digital currencies (and) uncensorable transactions … These withdrawal suspensions are a prime example of … shady behavior,” Lucas wrote in a column for Coingeek.
While a backlog may or may not be what caused the suspensions, “it fatally exposes many of the myths surrounding the narratives Binance likes to spin,” Lucas continued. “In what way are digital currencies decentralized, permissionless, or uncensorable if one company has the power to freeze all transactions for any period of time?”
Lucas suggested that a more plausible reason for the withdrawal suspension could be “a large number of customers attempting to realize gains on meme coins like Shiba Inu, for which Binance might not have the cash at hand.”
Lucas compared Binance’s withdrawal suspensions to behavior that casinos might typically indulge in.
“Delaying withdrawals is a favorite tactic of unregulated online casinos in the face of big wins,” he wrote. “Is Binance taking a leaf out of the offshore iGaming playbook? It’s unclear, and this is a question better left to the investigators who no doubt are watching Binance and its every move.”
Some observers agreed.
“Uh oh, it would seem Binance is selling more crypto than they have access to. Theres no other reason to suspend withdrawals unless they don’t have the asset available to be withdrawn. I wonder how leveraged they are right now,” Fak Yiu posted in the comment section on Marketwatch.
Others railed against the crypto movement.
“Congress needs to step up and ban cryptocurrency – it is a vehicle for drug dealers, extortionists, tax evaders and other bad people. Not to mention it is awful for the environment and is a scam to unsuspecting citizens,” Rex Price
Dave Bristel responded, “You realize that people who buy and sell stocks to make huge amounts of money are also using the stock market as a vehicle for dealing drugs, extortion, and evading taxes by keeping their funds in offshore accounts? Crypto is simply something that individual governments do not have direct control over, so they don’t like it.”
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
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