Binance lifts block on bitcoin withdrawals amid high volumes

May 7 (Reuters) – Cryptocurrency exchange Binance halted bitcoin withdrawals for several hours on Monday, citing large volumes and an increase in processing fees, before offsetting them at a higher cost.

Late Sunday and again early Monday, the world’s largest crypto exchange shut down bitcoin withdrawals saying there was a glut of pending transactions because it failed to offer so-called miners a high enough reward for recording transactions on the blockchain.

The halt pushed bitcoin lower although its losses were marginal, with the cryptocurrency down about 1% to $28,162, its lowest level in nearly a week.

“Our fixed fees did not anticipate the recent increase in network gas (bitcoin) fees,” Binance said in a tweet. “We are replacing pending bictoin withdrawal transactions with higher fees so that they are recovered by mining pools.”

Gas fees refer to payments made to crypto-miners whose computing power processes transactions on the blockchain.

“If the withdrawal amount is large, the gas fees required to process the transaction can also be significant, especially during times of high network congestion,” said Joshua Chu, chief risk officer of blockchain technology group XBE, Coinlectibles and Marvion.

“We need more information on what led to the significant withdrawals.” After an hour-long shutdown late Sunday and several hours Monday, Binance said withdrawals have resumed.

“To avoid a similar recurrence…our fees have been adjusted.” In a separate tweet, Binance denied that there were any major exits from the platform.

In March, Binance suspended deposits and withdrawals citing technical issues. Twenty-four-hour trading volume on Binance was $6.9 billion according to analytics site CoinMarketCap, more than eight times the second-largest venue, Coinbase.

Reporting by Akanksha Khushi in Bengaluru; Editing by Christian Schmollinger

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