In a post-mortem issued shortly after it lifted the freeze on bitcoin withdrawals, Binance has identified the “repairing of several minor hardware failures on wallet consolidation” as the incident that ultimately forced it to pause withdrawals. To fix the problem and to stop this from recurring, Binance said it changed the logic “to only take successful UTXO from consolidation transactions or successful withdrawal transactions.”
Minor Hardware Failures
Binance has said bitcoin withdrawals on its Bitcoin network have resumed just hours after “a stuck on-chain transaction” forced the exchange to freeze withdrawals for about three hours. According to a Twitter thread in which it seeks to reassure users, the exchange claimed that users’ deposits were unaffected. It added that users had an option to withdraw via other networks during the down period.
In its post-mortem of the events that forced the exchange to halt withdrawals, Binance claimed that the “repairing several minor hardware failures on wallet consolidation nodes” on June 13, had caused the “earlier transactions that were pending to be broadcast to the network after the nodes were repaired.”
According to the exchange, it was these transactions, which had a low gas fee, that led to transactions getting stuck. The exchange explained:
These pending consolidation transactions had a low gas fee, which resulted in the later withdrawal transactions – which were pointing to the pending consolidation UTXO – getting stuck and not able to be processed successfully.
Therefore, to fix this and prevent this from recurring, Binance said it had to “change the logic to only take successful UTXO from consolidation transactions or successful withdrawal transactions.” Following this change, withdrawals on the bitcoin network have resumed, the exchange said.
Centralized Finance vs P2P
Meanwhile, the decision to freeze withdrawals by Binance, one of the top centralized cryptocurrency exchange platforms globally, has sparked an angry reaction from the CEO of the peer-to-peer platform Paxful, Ray Youssef. In his June 13 tweet, Youssef also took the opportunity to tout the benefits of using a P2P platform.
“While exchanges like Binance have stopped all bitcoin withdrawals Paxful remains open. P2P is built on the honest principles of sound money just like p2p electronic cash ala bitcoin,” Youssef said.
The Paxful CEO ends his tweet by questioning Binance’s decision to “leave all sh*tcoin withdrawals open.”
Reacting to Youssef’s tweet, one Twitter user named Crypto Journal said: “Nice one just what I was telling people yesterday after CZ’s post. To keep it short Binance operates like CEFI [centralized finance] those guys are buccaneers they don’t care about the little guys. They fear if people start withdrawing they can’t meet up cause most of the bitcoins are on loan.”
What are your thoughts on this story? Let us know what you think in the comments section below.
Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.
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