Changpeng Zhao calls concerns ‘FUD’
Binance Twitter account on Sunday announced that it was temporarily closing Bitcoin withdrawals, citing a large volume of pending transactions and a “recent surge in $BTC network gas fees.
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The announcement caused fears rippled through Crypto Twitter as users speculated over the underlying reasons for the pause and expressed a broader anxiety for Binance’s stability.
Note that Binance is the largest cryptocurrency exchange in the world by trading volume. Concerns centered around the fact that other exchanges had not paused withdrawals, with the crypto critic Bennett Tomlin noting that “network congestion” on Binance is not something that could be solved by the company. Onlookers on Twitter noticed large outflows of Bitcoin from Binance totaling over $3 billion.
Changpeng Zhao, Binance CEO, on Twitter described the concerns as “FUD,” a popular crypto term for “Fear, Uncertainty, and Doubt.” He cited fluctuations in Bitcoin network fees, or the costs for processing transactions.
The Binance Twitter account described the events as a “learning opportunity” and the outflows as “movements between Binance wallets.”
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Patrick Hillmann, Binance’s chief strategy officer, shared a Twitter post that attributed the apparent outflows to Bitcoin being sent to new addresses on Binance, although withdrawals from the exchange still likely totaled nearly $300 million.
Binance’s announcements took the stage on Sunday, the turbulence reflected a hectic time for Bitcoin, the largest cryptocurrency by market cap. Fees have risen to two-year highs, largely driven by demand for “memecoins,” or crypto tokens created for speculation and humor, as well as the growing popularity of ordinals—non-fungible tokens embedded in Bitcoin transactions.
As John Reed Stark, a former enforcement attorney at the Securities and Exchange Commission, noted, the episode reflects the risks of regulatory uncertainty. Without clear oversight, he wrote on Twitter, it is impossible to verify the causes for the withdrawal pause.
“If Binance was SEC or FDIC registered, a U.S. team of auditors would be on site and in Binance’s face, demanding to speak to everyone, demanding documents, demanding trading info, immediately investigating and referring any suspicious conduct to the U.S. DOJ, trust is nonexistent in the crypto ecosystem.” he said.
Average transaction fees on the Bitcoin network were hovering at just under $20 during European hours earlier today, a bump from last week’s average $1.20 level.
Recalled that non-fungible tokens (NFT) tied to the Bitcoin blockchain surged above 3 million last week after a one-day spike in activity that mainly consisted of text-based assets, data from Dune Analytics showed.
While adoption has been brisk, the network congestion has briefly caused problems at crypto exchanges such as Binance, which paused bitcoin withdrawals twice over the weekend.
The Bitcoin Price as at the time of writing is $27,395.68