Binance.US, the U.S.-based subsidiary of crypto exchange Binance, experienced issues with facilitating withdrawals for Bitcoin Cash (BCH) on July 7.
The team attributed the issue to a “temporary shortage” in the concentration of BCH on the BCH network at the time.
“Our team is currently working to rebalance assets across all supported networks to facilitate future withdrawals,” read the status page on Binance.US’ website.
fascinating behavior pic.twitter.com/m5QLtd3Fad
— Dylan LeClair 🟠 (@DylanLeClair_) July 11, 2023
Some market participants pointed out that the withdrawal issues coincided with a surge in the price of BCH. The cryptocurrency has rallied 126% over the last month, with most of the price action taking place in the last week of June.
Other users took issue with Binance.US for being unable to honour withdrawals despite claiming to have native BCH backed by its reserves.
In an update on July 11, Binance.US said it maintained a 1:1 reserve for every BCH held on its platform. The temporary pause in withdrawals was caused by a technical issue in the exchange’s deposit sweeping system, said the crypto exchange.
We take the security and integrity of all customer assets seriously and want to address some recent FUD regarding $BCH. https://t.co/gM6e3xb9BX maintains 1:1 reserves, which means for every BCH you hold on our platform, we maintain a BCH in reserve.
The temporary pause we…
— Binance.US Customer Support (@BinanceUShelp) July 11, 2023
“Under normal conditions, our systems based on predetermined thresholds automatically sweep funds from our customers’ individual deposit wallets into our platform’s hot wallets and ultimately to our cold wallets where assets are securely stored,” said the Binance.US team.
“Going into this past weekend, however, the sweeps from our customers’ BCH deposit addresses were not happening automatically,” they added, noting that the issue did not happen for any other token.
The issue prompted the exchange to halt BCH withdrawals until a fix was implemented, the team said, assuring users that BCH withdrawals are now fully operational on all networks.
“In an environment where FUD spreads like a virus, we want to reiterate that Binance.US was established to serve U.S. consumers and structured to adhere to U.S. regulations,” the update concluded.
Binance.US, along with its parent company Binance and CEO Changpeng Zhao are in the cross-hairs of U.S. regulators, currently in the midst of a lawsuit filed by the Securities and Exchange Commission (SEC).