Six Hours of Unexplained Binance Downtime: Are Your Funds Really Safu?
According to a tweet from the CEO of Binance, Changpeng Zhao, the well-known cryptocurrency exchange has suddenly paused its trading due to what is being called “unscheduled maintenance.” The tweet did not explain much more than that, but Binance has been facing issues for the past few weeks, infuriating their users.
Due to the nature of the cryptocurrency ecosystem, fears often abound when trading is suddenly paused. A recent example of this was seen when Chinese exchange FCoin announced it would be suddenly closing down, without paying back millions of dollars it owed to its users.
However, despite this concerning unscheduled maintenance, the Binance CEO went on to Tweet: “Funds are #SAFU [safe]. No need to panic.” Unfortunately, the timing of this pause in trading has come at a time when users of Binance are not entirely happy with how things have been going thanks to an admitted issue with their performance.
This recent Tweet looks to be the cherry on top of a number of back to back issues that ha”ve dogged the exchange such as balances showing zero, and even no opportunity to go long on the exchange because they were running out of Tether (USDT)
Binance suffering from poor performance
Earlier this week, users reported a number of concerning issues around their trading on the large cryptocurrency exchange, especially around placing orders and checking balances. In fact, some users even noted that their funds were entirely missing as the balance mistakenly showed 0.
This issue forced the hand of Binance and its CEO, Zhao, who responded by stating they would release a report detailing the issues that were being experienced on the platform. This report came a few days later and essentially explained that Binance was not equipped to handle the traffic they were seeing.
However, these performance issues were only part of the problem as prior to this there were also reports that the exchange was experiencing a rare shortage of Tether (USDT) when major traders tried to place longs.
Now, to cap off what has been a bad few weeks for the major cryptocurrency exchange, the unscheduled maintenance that has been announced has many in the community scared that Binance’s security might be compromised and funds may be lost to some sort of hack.
At present, the Binance CEO has tweeted the explanation of what has happened, stating that one of the market data pushers had issues and this caused them to go down. Zhao explained:
“One of the market data pushers had issues, matching engine was fine, no data loss or corruption (other than market data). Working on it. Should be fixed soon,’ he tweeted. “Futures, using a separate matching engine, is still working fine. But no fund transfers between the products.”
“P2P and most other trading services are paused. Still progressing. Roughly 5/8 of the way there. But estimates are not 1:1 accurate to time. Balances etc are all intact. The only affected part is the market data. It just takes time, waiting sucks.”
Binance reign coming to an end?
Binance’s rise to prominence has been, in part, down to its offering as a margin trading service. This move into futures and margin trading was well timed as its popularity recently took off in the cryptocurrency space. However, the feeling now is that the behemoth exchange may have over stretched itself and taken on more than it can handle.
The exchange continues to expand beyond its means with new coins being added to its margin trading platform almost every week while issues with performance persist. It is not only trading offerings that are expanding, Binance is looking to be a one stop shop for the entire cryptocurrency industry, with the likes of its IEO launchpad, but this is leaving its core market – traders – out in the cold.
By having such a big client base, but not giving them what they need, or require, Binance could quickly turn their users off and into the arms of other margin trading platforms which are coming to the fore.
For example, BitMEX is such a platform that is in competition with Binance. They were the first to offer traders the ability to long or short the market with up to 100x leverage before anyone else did, and long before Binance. But even with this long history, BitMEX is not immune to its own controversies with a recent user email address leak highlighting a very poor standard of safety. More so, a United States Commodity Futures Trading Commission (CFTC) investigation was launched against them after American economist Nouriel Roubini suggested that US-based traders, who are banned from BitMEX, were getting around this by using a VPN.
Another platform that has been gaining much momentum in the past year or so is PrimeXBT which is heavily weighted to serving traders. This Bitcoin-based, multi-asset trading platform offer margin trading with high leveraging, and currently has one of the lowest fee structures, offering a flat 0.05 percent fee on all Bitcoin trades. They also allow for trading across a wide variety of assets, such as forex, commodities, stock indices, and cryptocurrencies. Thus far, its record remains clean and, in fact, it was recently honored in an independent review of cryptocurrency exchange customer service experiences by a top cryptocurrency industry influencer.
Competition breeds better alternatives
While many will see Binance as a go-to exchange based on its size, it is dangerous for such an exchange to try and harbour all the business and cover every aspect of cryptocurrency. It has become clear that Binance is overloaded, but more so, it is not feeling the pressure because the competition is only just starting to emerge.
If Binance continues to offer poor service while its competitors continue to grow, the major exchange could be in for a bit of a shock as traders look to more welcoming platforms like PrimeXBT and BitMEX.