Binance, global crypto exchange, announced Monday 6 February that it would temporarily suspend USD bank transfers. The USD withdrawal suspension date is from Wednesday 8 February. Since Binance made the announcement via Binance’s Twitter handle, some of its users have been panicking.
Understandably, the concerned Binance users suspect that this may again be the beginning of an imminent end similar to temporary withdrawal suspensions by crypto service providers that eventually became permanent. AAX, Genesis, and the big one FTX come to mind.
But Binance has assured users that the suspension only affects a small proportion of its users and that Binance is “working hard to restart the service as soon as possible”. Binance also assured users that all other methods of buying and selling crypto on Binance platform remain unaffected.
Also, Binance.US has clarified that it is not suspending $USD withdrawals & deposits on February 8. The temporary suspension of USD withdrawals is only for Binance.com users, it pointed out via a tweet. “We are completely separate entities from Binance.com”, emphasized Binance.US. At the time of writing, Binance.US customers are able to withdraw and deposit USD on its platform.
CAB also found out that the temporary USD withdrawal suspension only affects wire transfers under 100k. Users can still use their credit/debit card and bank information to purchase #crypto on Binance.com.
Mixed reactions from the Binance community as panic builds up, again.
While majority users appear to trust Binance.com, a few others do not share the same level of trust. Alarmed, these later users suspect that Binance.com may be facing undisclosed problems. Against the backdrop of the FTX contagion and the millions of users who have lost their funds, this suspicion may be, at least, understandable. Centralized crypto exchanges have come under heavy suspicion most recently.
Read also: What are the top 5 centralized crypto exchanges you should know?
One Annas Bin Malik tweeted:
Similarly, one Michaboar also tweeted:
But this user, Buy Bitcoin in Lebanon, doesn’t think so:
CZ responds, reassuring users that Binance is here for the long term.
Commenting on Binance’s announcement of the USD withdrawal suspension, Co-Founder & CEO of Binance, Changpeng Zhao, popularly known as ‘CZ’, replied via tweets. CZ pointed out that USD bank transfers are leveraged by only 0.01% of Binance’s monthly active users. But he conceded that “this is still a bad user experience and the team is working on quickly resolving this issue”.
CZ further explained that setbacks of this nature should be expected after last year’s incidents; referring to the one-too-many implosions in the crypto industry. Last year’s implosions include Celsius, Three Arrows, Luna/UST, FTX, and AAX.
If CZ’s tweet below is anything to go by, it appears that the temporary suspension of USD withdrawal is due to one or more of Binance’s third-party, crypto-bank service providers becoming unavailable.
This situation will not be very surprising to persons who have been following recent developments particularly since November when FTX collapsed. Crypto-based or crypto-friendly banks such as Signature and Silvergate experienced serious challenges recently. This may have affected their services to crypto exchanges and other virtual asset service providers (VASPs), including Binance.com.
Read also: FTX Collapse: Silvergate, crypto-focused bank, left scrambling after $8.1 billion bank run; stock plummets by 45%
Read also: Signature Bank’s stock SBNY downgraded from ‘buy’ to ‘hold’ as crypto deposits shrink by $8billion; stock price plunges by 67% YoY.
While no one knows for sure what happens next, CZ is focused on the big picture: “Long term, keep building”.