Binance, the world’s largest cryptocurrency exchange by trading volume, today, March 24, temporarily halted spot trading due to a corresponding engine error that disrupted the platform.
Bugs Detected, Withdrawals and Deposits Stopped
Binance CEO Changpeng Zhao, popularly known as “CZ,” said he discovered a bug during his analysis of stop order recovery. As a result, the exchange temporarily had to pause deposits and withdrawals, saying that the decision was also part of its standard operating procedure (SOP).
Initial analysis showed the engine to match the bug in a (strange) stop sequence. Healthy. About 30-120 minutes. Waiting for a more precise ETA.
Deposits & withdrawals are stopped as SOP (standard operating procedure). This fund #JARIK. 🙏 https://t.co/mvtGQ3JlMA
— CZ 🔶 Binance (@cz_binance) March 24, 2023
Crypto spot traders buy or sell assets without using a leveraged position. That means users can instantly exchange crypto or fiat for other crypto assets and vice versa. Spot trading is different from derivatives trading, where the trader can open a Bitcoin or BNB position, for example, use leverage or borrow money from the exchange for greater risk.
In response to the question about stopping withdrawals, CZ stated that the status of the order in the corresponding machine directly affects the funds available for withdrawal in the user’s account because the logic of checking the corresponding machine is a security procedure before the withdrawal process.
After identifying the problem with Engine 1, Binance restarted. However, reconciling and synchronizing the machine takes time, as the bug occurs 57 minutes after the hourly snapshot.
The Binance CEO further noted that the platform has achieved 100% uptime by 2022. In the future, the Binance team will conduct pre-trade tests. Even so, deposits will be activated, then internal transfers, then a 30-minute “cancel-only period” will be allowed. Next, crypto trading will continue.
This is about 60 minutes ETA. Our team is doing pre-trade testing now. For those new to us, our resume SOP is roughly as follows:
Announcement in due course (soon).
Active savings (complete now).
Internal transfer enabled (complete now).
30 minute cancel mode only (yet)
Keep trading… https://t.co/ZtkhTkD1CD— CZ 🔶 Binance (@cz_binance) March 24, 2023
Binance Stress Test
Binance is no stranger to the uncertainty triggered by these situations.
In December 2022, Binance saw a large withdrawal of USDC, which CZ called a “stress test.” The “stress test” comes amid worries about reserves as investors have been wary of centralized exchanges due to FTX’s rapid collapse.
However, while billions were moved from the exchange in several days, Binance remained one of the most capitalized and continued to meet withdrawal requests.
We saw some withdrawals today (net $1.14b ish). We’ve seen this before. Some days we have net withdrawals; some days we have a net deposit. Business as usual for us.
I actually think it’s a good idea to “pull a stress test” on each CEX on a rotating basis. 💪
1/2 https://t.co/uF9lLPDSyS
— CZ 🔶 Binance (@cz_binance) December 13, 2022
This is also not the first time that Binance has stopped withdrawing coins. After Silicon Valley Bank (SVB), Binance temporarily halted withdrawals on its stablecoin USDC. The exchange stated that because the exchange between the Binance USD stablecoin issued by Paxos and USDC requires open US banks.
Binance has suspended the automatic conversion of USDC to BUSD due to current market conditions, specifically related to high inflows & increased burden to support the conversion.
This is a normal risk management procedural step to follow when monitoring the situation.
– Binance (@binance) March 11, 2023
Paxos, the issuer of the stablecoin BUSD, has been ordered by the New York Department of Financial Services (NYDFS), not to create new tokens.
Paxos Trust continues to manage BUSD dollar reserves. It maintains that the BUSD will always be backed 1:1 with US dollar denominated reserves, fully segregated and held in a remote bankruptcy account.
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