Binance glitch halts trading, takes Bitcoin on a wild ride

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(Kitco News) – Binance, the largest cryptocurrency exchange in the world, was forced to suspend all trading, deposits and withdrawals early Friday morning, provoking panic from market participants and prompting swift reassurances from CEO Changpeng Zhao (CZ).

“We are aware of an issue affecting spot trading on Binance,” the exchange tweeted just after 7:30 a.m. EDT. “All spot trading is currently temporarily suspended as we work to resolve this as soon as possible.”

Soon after, CZ took to Twitter to give more details. “Initial analysis indicates that the matching engine encountered an error on a trailing stop order,” he wrote. “Deposits and withdrawals are paused as a SOP (standard operating procedure).” He added that all funds were safe and trading was expected to resume within two hours.

The exchange shutdown immediately affected Bitcoin, with market participants selling on other exchanges amid concerns about what the problems at Binance could mean, sending BTC from $28,055 to a session high of $27,541 within minutes.

Just after 8:30 he returned with one Update. “Engine 1 is back online. Still need more time to make adjustments, and for other engines to catch up. We were a bit unlucky with this error. Our engines take snapshots every hour. This error occurred after 57 minutes. So playback/tuning takes a bit longer.”

Crypto holders grew increasingly nervous about the potential impact of the halt on prices. “Not quite in the mood for trivia – more interested in answers to questions if the risk is if the spot price falls while you wait (which is bad for sellers)…” wrote twitter user etc_chmod.

CZ responded, seeking to reassure traders whose crypto was frozen on Binance while prices fell on other exchanges.

“When the biggest exchange stops trading, prices won’t move much,” he wrote. “If it moves on smaller exchanges, when #Binance comes back, our deeper order book will bring the price back, causing these guys to lose money. Traders know this.”

At 9:30 CZ posted another update, moving the ETA for resumption of trading to after 10 and outlined the stages by which various functions would be available.

Estimated 60 min ETA. Our team is doing pre-trading tests now. For those new to us, our CV SOP is roughly as follows:

Announcement with exact times (soon).
Deposit activated (finished now).
Internal transfers enabled (done now).
30 minutes with interrupt mode only (not yet)
Resume trading… https://t.co/ZtkhTkD1CD

— CZ 🔶 Binance (@cz_binance) March 24, 2023

A few minutes later, Binance announced that trading would resume at 10 a.m. EDT and published a statement on its website. “Starting now, users will be able to cancel orders, process deposits, trade on P2P and perform loans, redemptions, asset transfers and all other account-related functions,” they wrote. “Withdrawals will resume shortly after spot trading begins.”

Significantly, trailing stop order functionality will not be part of the resumption of service, and “will be temporarily suspended until further notice,” with all existing trailing orders automatically expiring.

“It is recommended that futures and margin trading users with open positions reassess their collateral before commencing spot trading to mitigate against price fluctuations that may occur,” they wrote in the statement.

At the time of writing, trading has resumed on the Binance platform and Bitcoin has recovered to a session high of $28,208.