Binance crypto exchange outage sparks outrage as traders lose millions

Binance policy allows investors to get compensation on trading losses due to system or internal issues but does not cover the “what could have been” situations.

Outages in crypto exchanges have resulted in losses for investors trying to get out in time. While Binance has been proactive in neutralizing such situations, numerous investors are reportedly seeking damages due to the exchange’s inoperability. 

Speaking to CNBC, a Binance spokesperson highlighted the company’s policy that promises to compensate actual trading losses due to system or internal issues, but noted:

“We do not cover hypothetical ‘what could have been’ situations such as unrealized profits.”

In some cases, when investors reached out for compensation in relation to the said outage, Binance’s customer service team reportedly offered a low rebate while refusing to comment on “pending legal matters.”

Back on Feb. 11, binance had to temporarily go offline after suffering an outage due to a 60% spike in its web traffic. As a result, the exchange suspended “deposits, withdrawals, spot and margin trading, P2P trading, OTC Portal trading, savings & redemption, as well as asset transfers from sub-accounts, margin accounts, futures accounts, and fiat wallets.”

Related: Draft of El Salvador Bitcoin banking regulations released

Binance has recently caught the attention of regulators across the world in relation to trading and licensing complexities. Binance CEO Changpeng Zhao has stated his intention to get licensed in every jurisdiction.

Zhao publicly offered Binance’s CEO position to a person “with a strong regulatory background.” Currently, Binance is facing regulatory scrutiny from authorities across the world, including the Netherlands, Malaysia and South Korea.

Aimed at damage control, Binance has proactively started implementing restrictions to lower the chances of high-risk trading — from limiting high-leverage trading to completely restricting derivatives trading.