Amid Elon Musk, Dogecoin Frenzy, Binance Overloaded With Demand

Jan 29, 2021 | Decrypt News | 0 comments


Binance CEO Changpeng Zhao is chalking up the exchange’s recent load issues to some combination of Elon Musk, Dogecoin, and the chaos surrounding GameStop and r/wallstreetbets.

The world’s largest cryptocurrency exchange was forced to temporarily suspend withdrawals earlier today, in a response to what Zhao referred to as “system load issues.”

Now, Zhao tells Decrypt that Binance has seen “exponential growth in user traffic, trading volumes and deposit & withdrawal volumes, and system load across the board.”

Zhao suggested that Elon Musk’s changing his Twitter bio to “#Bitcoin” earlier this morning may have contributed to the traffic uptick. Musk’s seeming endorsement of the coin was widely attributed as the reason that the price of Bitcoin spiked by 15%, squeezing out short sellers to the tune of $450 million. The wild morning in crypto followed a period of uncertainty in the traditional markets; earlier this week, a subreddit called r/wallstreetbets sent the price of stocks like GameStop and AMC to new highs, creating a short squeeze that’s cost hedge funds billions.

And as the stock trading app Robinhood faces new scrutiny, influencers like Anthony Pompliano and the Winklevoss twins have been trying to herd anxious investors toward crypto exchanges.

“It’s impossible, for us or anyone, to assign a specific cause to some result in a free market,” said Zhao. “We can’t say for certain that Elon’s Twitter bio change caused sudden price movements in Bitcoin, which led to a massive traffic spike to Binance, which then overloaded parts of our systems, and caused some withdrawal delays.”

Binance’s CEO added: “It could have been Elon’s Twitter bio change; It could have been WallStreetBets; It could have been some whales in Asia or Uganda, or 1,000 other potential reasons. There is no way to be 100% sure. It’s all likely, but who knows.”

One other possible culprit, per Zhao, is Dogecoin, the cryptocurrency that’s seen significant gains over the past 24 hours. Dogecoin began as a gag—a so-called “meme coin” designed to poke fun at Bitcoin knockoffs—but the recent price increase is very real: it’s shot from around $0.01 to over $0.04 overnight.

“We actually almost ran out of Dogecoin deposit addresses because the new address generator wasn’t able to generate new addresses for user deposits fast enough to match user deposits,” Zhao said. “On the withdrawal side, our normal number of nodes can’t process the amount of withdrawals that’s happening either, we had to significantly increase the number of nodes in a short period of time. Whenever there are [sic] exponential growth, there are high chances of congestion.”

For now, Binance is back up and running.

Scott Chipolina contributed reporting.

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