Business & FinanceSpotlight

Crypto Traders Lost Thousands Due to Binance Critical Lag

It seems that the cryptocurrency exchange Binance just can’t catch a break from a series of unfortunate events. Soon after recovering from the critical security breach, Binance experienced a critical lag, sending traders into an annoying frenzy.

On Wednesday morning, May 22, Binance users experienced an extreme lag on the platform, particularly with trade settlement and balance syncing. Binance CEO Changpeng Zhao confirmed the speculations later that day on Twitter, promising the community that the team was working on the issue.

Several crypto traders, who got stuck in trades they would have canceled had it not been for the lag, took their frustration to Twitter as they had to bear the brunt of unintended losses.

At least five users reported having suffered losses worth thousands of dollars.

Although some trades seemed to have gone through but the balance was not updated, which meant that further trades could not be made. While providing live updates on fixing the issue, Zhao also revealed the reason behind the lag: the problem was caused by heavy trading volume. He wrote:

READ ALSO: Binance Launchpad IEO’s Producing More Than 600% Returns

Labeling the lag as a “good problem to have” probably wasn’t the smartest move as it annoyed traders more so than the lag itself. It was in fact selfish of CZ as it implies that as long as the exchange is faring well in trading volumes, they don’t really care about the traders. A Twitter user even called CZ out in his tweet, saying:

Good for you, perhaps. Bad for those of us who were unable to place/cancel orders and were stuck with risk on, unable to trade during this stretch.

CZ was quick to respond to the backlash he received after his controversial statement, saying that there is no time for choice of words when the platform is fighting system issues.

The exchange’s backlogs coincided with large market movements. Bitcoin and major Altcoins came under selling pressure during late US trading hours on Wednesday. Another user on Twitter expressed concerns if Bitcoin were to surpass its former price records during the lag, which would be disastrous for the traders. @Yo_Dez said:

Hopefully this doesn’t occur when $btc is above 30k…could be an even bigger issue

Moreover, CZ explained that the API users, which are mainly bots and trading software, were not affected by the lag. Regular users who manually enter their trades on the platform were the ones who suffered from the technical problem.

READ ALSO: BNB Price Surge: Binance Reopens Trading Post Bitcoin Hack

After several hours, Zhao tweeted that the platform had returned to normal and things should be working smoothly now on the platform. However, he did mention that some transactions would still be backlogged for now.

While the lag was a major inconvenience, costing Binance users their valuable cryptos, it wasn’t anywhere near as critical as the security breach which resulted in the loss of 7,000 bitcoins from hot wallets. The crypto exchange was forced to foot the bill for the losses during the hack. However, in the case of the recent lag, Changpeng Zhao has yet to explain how the exchange will handle the unintended losses incurred by traders.

Binance remains one of the leading crypto exchanges despite recent hiccups. However, Binance’s reputation as one of the most secure and user-friendly exchanges in the industry might be in jeopardy.

It is highly likely that the users from now on will be a little more cautious using the platform. It remains to be seen exactly how much financial damage these technical issues will do in the long term.


Abeer Anwaar

Abeer holds a Bachelors degree in Media studies and covers blockchain startups for BlockPublisher. An optimist, excels in the art of the written word and swears by the joy of all things sweet. Contact the editor at editor.startups@blockpublisher.com

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