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