Binance Moves $4.4B In Bitcoin To Cold Wallets For Added Security

Key Points:

• Binance transferred $4.4B worth of Bitcoin between its wallets due to BTC address adjustments, using cold wallets for added security.
• The incident highlights the importance of secure cryptocurrency storage, especially for large exchanges like Binance.
• The withdrawal halt due to blockchain congestion caused a backlog of transactions, leading to a 3.1% drop in the Bitcoin price.

Binance transferred $4.4B worth of Bitcoin between its wallets, citing BTC address adjustments. The use of cold wallets underscores the importance of secure storage. The bitcoin price fell by 3.1%, and withdrawals were halted due to blockchain congestion.

Binance, the world’s largest cryptocurrency exchange, transferred $4.4 billion worth of Bitcoin between its wallets on Sunday. According to CryptoQuant’s Head of Research, the transfer was completed in two parts, consisting of 117,000 and 40,000 Bitcoins, respectively. Cold wallets, which are not connected to the internet, were used, as they are considered more secure than hot wallets.

A lot of people commenting about the huge Bitcoin outflows from Binance today.
Two transactions of 117K and 40K Bitcoin respectively.

In reality, these are bitcoin sent to newly created change addresses that belong to Binance.

Effective outflows are most likely just 10,100… pic.twitter.com/c5z8WOshG6

— Julio Moreno (@jjcmoreno) May 7, 2023

Binance claimed that the transfer was carried out due to BTC address adjustments. Binance also halted Bitcoin withdrawals for a short period, citing congestion on the blockchain. The company lifted the halt after applying higher fees to pending transactions to motivate Bitcoin miners to pick them up. Bitcoin fell by over 3% on Monday, along with other cryptocurrencies, to trade at around $28,000.

This transfer is not unusual for large cryptocurrency exchanges, which often use management systems with hot and cold wallets to enhance both liquidity and security. Cold wallets store a large amount of cryptocurrency, while hot wallets are used for transactions. The bitcoin price drop may be attributed to the withdrawal halt, which caused a backlog of transactions, leading to congestion on the blockchain.

This incident stresses the importance of secure cryptocurrency storage, especially for large exchanges like Binance. Cold wallets should be used instead of hot wallets to prevent attacks by hackers. Additionally, Binance’s transparency and communication with its users were commendable, as it explained the transfer and the withdrawal halt.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Thana

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