On May 8, cryptocurrency exchange Binance blocked Bitcoin BTC withdrawals for the second time, citing a huge backlog of pending withdrawals.
Binance announced on May 8 that it had “temporarily” suspended BTC withdrawals due to a “large volume of pending transactions.”
The transactions were still pending, according to the company, since its “set fees did not anticipate the recent surge in [Bitcoin] network gas fees.”
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We've temporarily closed #BTC withdrawals due to the large volume of pending transactions.
Our team is currently working on a fix and will reopen $BTC withdrawals as soon as possible.
Rest assured, funds are SAFU.
— Binance (@binance) May 8, 2023
Almost two hours after its initial tweet, the exchange released an update, stating that it was “replacing the pending [Bitcoin] withdrawal transactions with a higher fee so that they get picked up by mining pools.”
Binance announced over three hours after its original tweet that Bitcoin withdrawals have begun, with pending transactions being processed at higher transaction fees.
It also stated that it was working on facilitating withdrawals via the Lightning Network, which it claimed might help alleviate future withdrawal halts.
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$BTC withdrawals are now resumed on #Binance.
Pending transactions are being processed by replacing them with higher transaction fees.
We'll post another update once these pending transactions are all processed.
— Binance (@binance) May 8, 2023
Earlier on May 7, Binance also had to temporarily suspend Bitcoin withdrawals, claiming there was an overflow of transactions on the blockchain. It reopened withdrawals over an hour and a half later.
The Bitcoin mempool had a backlog of roughly 400,000 transactions waiting to be processed at the time. According to mempool.space data, this had increased to approximately 485,000 at the time of Binance’s second withdrawal halt.
A mempool is a place on the Bitcoin network where transactions “wait” before being validated by each blockchain node.
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According to CryptoQuant statistics, Binance had large Bitcoin net negative withdrawals on May 7, with roughly 175,650 BTC worth around $4.95 billion leaving the exchange that day.
Binance claimed that the outflow data was caused by the exchange of Bitcoin between its hot and cold wallets.
