The biggest cryptocurrency exchange in the world, Binance suspends withdrawals, spot trading, and deposits due to a “problem” that it is trying to fix.
“Initial analysis indicates matching engine encountered a bug on a trailing stop order (a weird one),” Changpeng Zhao, the founder and CEO of Binance explained in a tweet and added that the company anticipates a turnaround in two hours.
Why Binance suspends withdrawals and spot trading?
Almost 60% of all cryptocurrency spot volume is controlled by Binance. Because of the absence of commissions, it has also boosted its market share of the Bitcoin spot volume to over 90% in recent quarters, according to Arcane Research.
In response to the news of Binance suspends withdrawals, Bitcoin dropped 1% to $27,649 while Ethereum dropped 2% to $1,751 before somewhat recovering.
Engine 1 is back online. Still need more time to do reconciliations, and for other engines to catch up.
We were a bit unlucky with this bug. Our engines take hourly snapshots. This bug happened 57 min in. So, replay/reconciliation takes a bit longer.
— CZ 🔶 Binance (@cz_binance) March 24, 2023
The company still hasn’t made any announcements regarding the cause of the ‘bug’, which is increasing the amount of suspicion among users.
Binance under scrutiny
The error is particularly significant as a month after the largest cryptocurrency exchange in the world stopped processing dollar transfers, Binance said last week that it will stop accepting deposits and withdrawals in sterling.
The Justice Department is also looking into the cryptocurrency exchange for possible money laundering and sanctions violations, according to prior reports.
According to sources, the inquiry was launched in 2018 and is concentrated on Binance’s compliance with American anti-money laundering rules and sanctions. According to two of the sources, several of the at least six federal prosecutors working the case feel that the information previously acquired supports taking serious action against the exchange and charging certain officials, including the founder Changpeng Zhao, with crimes. The sources claimed that others have urged for taking the time to consider further evidence.
The Money Laundering and Asset Recovery Section, also known as MLARS, the U.S. Attorney’s Office for the Western District of Washington in Seattle, and the National Cryptocurrency Enforcement Team are all involved in the investigation. According to Justice Department regulations, the MLARS chief must give his or her approval before filing money laundering charges against a financial institution. Any action against Binance would probably require approval from senior DOJ officials as well as leaders from the other two offices, according to three individuals.
The severely unstable cryptocurrency industry is playing with fire, as Binance’s hold on the market might be lessened if Zhao and Binance are found to be guilty. Because of the most recent failure of competitor exchange FTX, its grip has become stronger, as we explained recently: After FTX collapse, Binance under investigation
According to the four sources, the defense lawyers for Binance at the US law firm Gibson Dunn have recently met with representatives from the Justice Department. One of Binance’s defenses is that a criminal prosecution would devastate the crypto market, which is currently experiencing a protracted decline. According to three of the sources, prospective plea bargains were discussed.
Unlicensed money transfer, a money laundering conspiracy, and criminal sanctions violations are the alleged offenses that are under investigation, according to the four people. According to a source with knowledge of the matter, no charges have been officially decided upon, but Zhao and a few other executives are believed to be the focus of the inquiry by the government. In the end, the Justice Department may decide to charge Binance and its officials, work out a resolution, or simply close the inquiry without taking any further action.
The Wall Street Journal and Bloomberg were informed by a key executive of Binance last month that Binance anticipated paying fines to end U.S. investigations into the business.
As Binance suspends withdrawals and spot-trading today, eyes are once again on the company, and as fear increases in the sector, the situation is becoming direr for Binance at the moment. You can go to Binance’s website to check if the company fixed the ongoing issue at the time of your reading.