Binance suspends digital currency withdrawals: What’s going on?

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A few days ago, CoinGeek reported how cryptocurrency exchange Coinbase went offline during another market pullback. On Monday, Binance has twice suspended all digital currency withdrawals citing a backlog as the reason.

Withdrawals were initially suspended and resumed about 25 minutes later before being suspended and resumed again. What’s going on over at Binance, and what does this mean for the decentralized, permissionless narrative promoted by Binance CEO Changpeng Zhao and others?

😱 Binance has suspended ALL #Bitcoin withdrawals!

— Bitcoin Archive (@BTC_Archive) November 1, 2021

More shady conduct by Binance

As stated above, Zhao likes to paint himself as one of the darlings of the “crypto” movement. He can often be found on Twitter promoting misleading ideas about decentralization, permissionless access to digital currencies, uncensorable transactions, etc. However, a deeper analysis of Binance and its conduct shows that it’s almost the exact opposite of what it portrays in public.

These withdrawal suspensions are a prime example of the shady behavior that typifies the firm. It stands accused of manipulating digital currency markets, has been blocked or banned in many law-abiding countries and has moved from one country to the next as it tries to avoid compliance with regulations.

As it does with the core tenants of the anarcho-capitalist mindset that currently rules digital currency markets, Binance pays lip service to regulation, but its actions paint a very different picture. One might ask why a company with nothing to hide is so keen to avoid opening its books to regulators and agreeing to basic customer protections.

What caused Binance to suspend withdrawals?

Binance cited a backlog as the reason for the action, and while this may or may not be the case, it fatally exposes many of the myths surrounding the narratives Binance likes to spin. In what way are digital currencies decentralized, permissionless, or uncensorable if one company has the power to freeze all transactions for any period of time?

Could a more plausible reason for the withdrawal suspension be a large number of customers attempting to realize gains on meme coins like Shiba Inu, for which Binance might not have the cash at hand? Delaying withdrawals is a favorite tactic of unregulated online casinos in the face of big wins. Is Binance taking a leaf out of the offshore iGaming playbook? It’s unclear, and this is a question better left to the investigators who no doubt are watching Binance and its every move.

What is clear is that Binance customers aren’t happy. Many took to Twitter and other social media platforms to call the exchange out, while others highlighted the need for token exchanges to take place on so-called decentralized protocols that aren’t controlled by corporations.

Everything you think you know about this industry is a lie

Events such as a couple of temporary withdrawal suspensions by a major digital currency exchange don’t seem like much in isolation, but as they add up across the board, they expose a truth many don’t want to acknowledge; almost everything people think they know about “crypto” is a lie.

As the actions of Binance and other exchanges like Coinbase and BitMEX have repeatedly shown, the industry is largely in the hands of self-interested criminals who balk at regulation as they milk the masses by both counter-trading them and charging them extortionate fees to access the new financial system they claim will be more inclusive and accessible.

In its current state, the digital currency space is nothing more than a global, unregulated casino, and Binance is happy to continue raking in fees to facilitate this. In a regulated environment, it would have to prove its claims of a backlog as the main reason for suspending withdrawals, but as things stand, it won’t have to do so and will continue to mislead newcomers and those who haven’t yet woken up to the game.

However, despite the best efforts of vested interests, this Wild West era is coming to an end. Powerful regulators have vowed to crack down across the globe, court cases threaten to expose the lie that coins can’t be moved without private keys, and more and more people are beginning to question the narratives that have been spun as the tough-talking crypto-anarchists fold one after another when faced with the law.

Right now, it’s impossible to prove why Binance really suspended withdrawals. However, as regulations pass into law in more and more countries, it will become easier to determine the facts amidst the fiction.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—a from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and 
Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.