Binance denied having been the victim of any hack. Trading and withdrawals were suspended on one of the world’s largest crypto exchanges due to a system upgrade. This article outlines the causes and events behind the trading suspension and explains the likely consequences.
Critical system issues caused the suspension of operations
The severity of the exchange’s system problems, headquartered in Hong Kong, first became apparent on Thursday at 02:20 local time. In an official announcement, traders were informed that “due to a significant increase in users and trading activity, Binance must extend the system upgrade period” that had begun earlier.
Users were told the work was expected to be completed by 15:00 GMT+1 and that “withdrawals and trading will remain suspended during this period.” However, by 14:07 GMT+1 the exchange was forced to push back the planned resumption of trading significantly, postponing the restart until 05:00 GMT+1 on Friday.
According to statements, “No data will be lost”
Zhao Changpeng, CEO of Binance, said on Twitter that the exchange experienced a server issue on its replica database cluster, causing some data to be unsynchronized. That situation required the database to be “fully resynced from the master database.” He added that “no data will be lost.”
Zhao replied to a Twitter user who asked whether the exchange had been the victim of a cyberattack:
“…we were not hacked. It’s just that working with very large amounts of data takes time.”
Public and user reactions
The suspension at one of the world’s largest exchanges occurred amid heightened tension after Japanese exchange Coincheck suffered a $500 million hack late last month. As a result, Binance’s issues prompted a mix of criticism, concern and support from Twitter users.
“This is crazy! 24 hours of suspension is absolutely unacceptable!”
one user tweeted.
But another user offered a more measured perspective:
“Technical difficulties and outages happen, especially with the largest and most complex exchanges. That’s part of the risk we all accept.”
Mr. Zhao also acknowledged on Twitter:
“We still have a lot to improve. We are hiring.”
Conclusion
Cryptocurrencies began recovering in recent days after a sharp decline. Bitcoin, the most actively traded cryptocurrency, rose 12.8% on the Bitstamp exchange to $8,569, after having been traded as low as $5,920.72 earlier in the week.
In an enthusiastic market like this, Binance and other cryptocurrency exchanges are growing rapidly. In mid-January, Mr. Zhao told Bloomberg Television that the exchange was gaining “a couple million” users each week. With such rapid growth and evolution, incidents like this are to be expected.
In any case, Binance acted responsibly by allowing users to cancel orders and by providing live updates about the situation. While many traders likely incurred losses, these events are part of a sector that still needs to mature. Some suggest decentralized exchanges such as BitShares or the Waves DEX as alternatives.
Trading has since resumed, and Binance offered a 70% discount on trading fees to users until midnight on February 24 as “a thank you for support during this temporary upgrade period.” For those considering entering the market, the exchange remains a viable option to start investing in cryptocurrencies.