The rollercoaster-ride in cryptocurrency prices on Monday was accompanied by Binance’s fresh restrictions for ethereum and ERC-20 tokens.
Ethereum Network Congestion Fingered as the Culprit for the Temporary Halt
Through the official Binance Twitter account, one of the world’s largest cryptocurrency exchanges by volume, announced that it had “temporarily suspended withdrawals of $ETH and ethereum-based tokens” due to network congestion while underscoring that user funds were SAFU (Secure Asset Fund for Users).
Rest assured funds are #SAFU and we apologize for any inconvenience caused.
Updates to follow.
— Binance (@binance) February 22, 2021
Although Binance has since reversed its earlier decision and restored service in an announcement 37 minutes after its first tweet, traders were quick to pile on with the criticism. This latest move came amid a spike in Ethereum gas costs and a backlog that quickly escalated past 151,000 pending transactions. Binance CEO Changpeng Zhao corroborated the stress on the system, noting that gas shot past “+1200” during the latest congestion.
— CZ 🔶 Binance (@cz_binance) February 22, 2021
Binance has already become a big target among the crypto community after being blamed for persistently high gas costs. Some claim that the congestion is a concerted effort on the part of Binance to attract more users to its Binance Smart Chain. However, given the tremendous transaction volumes and gas fees that Binance pays to the Ethereum network weekly, this claim is hard to corroborate
Binance Outage Underlines the Need to Scale
Yet, together with other…