- Binance temporarily suspended withdrawals of ETH and ERC-20 tokens to address a congestion issue.
- Binance Coin’s (BNB) price spiked immediately after the pause was announced.
On its official Twitter account, Binance announced that it had suspended withdrawals of ETH and Ethereum-based (ERC-20) tokens. The suspension was due to community congestion. At the same time, Binance disclosed that all funds were SAFU (Safe Asset Fund for Customers).
Rest assured funds are #SAFU and we apologize for any inconvenience caused.
Updates to follow.
— Binance (@binance) February 22, 2021
However, Binance quickly reversed its decision and restored services in a post 37 minutes after its first tweet. Still, merchants were fast to pile on with the criticism. This latest congestion caused a spike in Ethereum gas prices and led to a backlog of over 151,000 transactions.
Binance CEO Changpeng Zhao also confirmed the system’s stress in a tweet but denied that the move was planned.
ETH is super congested now, at 1200+ gas. @Binance have suspended withdrawals.
There was a conspiracy theory that Binance is deliberately making ETH gas fees high. 😂 Let’s see it come down a bit. pic.twitter.com/tNK9b3b9OK
— CZ 🔶 Binance (@cz_binance) February 22, 2021
Notably, some investors have been accusing Binance of pushing ETH gas prices. Some even say that the congestion is an all-out effort by Binance to drive customers to its Binance Smart Chain — an accusation CZ denied.
Interestingly, the Binance Coin (BNB) price rose from $260 to a brief peak of $350 instantly after the announcement. Ether had a mild fall from $1,930 to $1,916 during the same time, which could have been a normal fluctuation.
In addition, many are ascribing the BNB rally to the expanding usage of the Binance Smart Chain. Indeed, BSC now has twice the daily transactions of Ethereum. It seems that the exchange has no reason to actively undermine the Ethereum blockchain. However, the lack of clear details is alarming for some.
Besides, the rollout of Ethereum 2.0 has helped greatly with scaling. However, time will show if plugged in blockchains will be able to keep up.