Binance crypto: What is it and why were withdrawals being suspended?

THE Binance crypto exchange platform briefly suspended withdrawals yesterday, leaving customers without their investments.

We explain why withdrawals were suspended and what your rights are.

We explain all you need to know about Binance and why it suspended withdrawalsCredit: Rex

But first, a word of warning: buying cryptocurrencies, like any investment, is a very risky business and making money is never guaranteed.

You should make sure you know the risks of investing in cryptocurrencies and that you can afford to lose any money you put in.

Cryptocurrencies are highly volatile, so the value of your investments can go down as well as up in the blink of an eye.

As always, never invest in something you don’t understand.

What is Binance?

Binance is a cryptocurrency exchange platform for trading various cryptocurrencies.

As of last month, it was the world’s biggest bitcoin and altcoin crypto exchange by volume.

Its users complete more than 1.4million transactions per second, according to its website.

Binance was founded in 2017 by Changpeng Zhao, a Chinese-Canadian developer who had previously created high frequency trading software.

Its major rivals are Kraken and Coinbase – the latter which went public in the US last month.

5 risks of crypto investments

BELOW we round up five risks of investing in cryptocurrencies.

Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
Marketing materials: Firms may overstate the returns of products or understate the risks involved.

Why were withdrawals suspended?

Binance announced on Twitter that it had stopped withdrawals around lunchtime on May 10.

The tweet said: “All withdrawals are temporarily suspended on #Binance.

“Rest assured our team is working on it.

“We apologize for any inconvenience caused and thank you for your patience.”

Less than 30 minutes later, it then tweeted: “Withdrawals are now resumed.”

If you tried to withdraw during that time, your request would’ve been added to a queue but it wasn’t processed until the issue was resolved.

The platform didn’t give a reason for the suspension, but its founder told Bloomberg: “We sometimes have to do some system maintenance work.”

The Sun has contacted Binance for comment and we’ll update this article if we hear back.

Your rights if withdrawals are suspended

Trading disruptions aren’t that common on the cryptocurrency markets, where there is less regulation compared to stock exchanges.

Yet the frequency can cause problems to customers, who’ll be unable to withdraw their investments during suspensions.

With cryptocurrencies highly volatile, their values can swing wildly in minutes.

There is also no guarantee that you can convert crypto assests back into cash, as it may depend on the demand and supply in the existing market.

If you found yourself without access to your investments, unfortunately there’s not much you can do but wait out the suspension.

However, when Binance suspended withdrawals in April due to “maintenance work”, users had a 30-minute window afterwards to cancel orders, process deposits and transfer funds before trading resumed.

Last week Gary Gensler, the newly-appointed Chairman of the Securities and Exchange Commission, told CNBC that crypto tokens were “indeed securities” and as such would likely fall under the regulator’s broader authority.

“I think that we need greater investor protection there and we don’t have a federal regime overseeing the crypto exchanges, so if an investor wants to trade on that Bitcoin, understanding it’s highly volatile, highly speculative, but if they want to trade on that, that we have in place some investor protection and that’s what I was saying I think is a gap in our system right now,” he said.

The popularity of crypto and its wild market swings are also catching the attention of more central bankers and regulators. Last week, Bank of England Governor Andrew Bailey issued a stark warning to those investing in cryptocurrencies: “Buy them only if you’re prepared to lose all your money.”‘