Binance is spamming mempool

[NeuroticFish]

Although I've taken a quick look, this doesn't seem to be discussed, and I think it should.

It looks like Binance has decided to consolidate their wallets/transactions last night. It's something they do now and then, but the current timing could not be worse.
And from CZ I do expect to be a deliberate move (usually in his favor, not ours), but I don't understand the reasons. Spamming mempool now means more panic to the average Joe in these days he's overly panicked. Does he want to make people change their minds about withdrawing from exchanges? Or does he try to cover some exchanges that can now claim withdrawing issues? I don't know.

For better info on the context, it worth looking on this tweet and the subsequent ones and also the images:
https://nitter.it/OwenKemeys/status/1592223269310328833

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[DaveF]

Or is he trying to combine his coins for when people start to massively withdraw from his scam exchange so he can charge his users massive fees and have transactions with fewer inputs, send out all of his withdraws at 1 sat/vbite anyway and they will be small and still confirm. In the end it costs them more or less the same, but it lets him screw over more people that way.

Either way, it's Tuesday AM where I am and it will still probably clear by the weekend so at worst it's a few days.

-Dave

[Wind_FURY]

It's either prevention for mass withdrawals, or the community became more paranoid after the second biggest exchange has scammed the community. For me, it's probably just coincidence. But if it's as a prevention for another exchange "bank run", then I believe the result would be a positive, not only for the exchanges, but for the community as well, no? We don't want another crash.

[OcTradism]

The massive waiting transactions in mempool only occured in less than 24 hours ago. Because yesterday, mempool is very clear and we can move bitcoin with 3 satoshis to 5 satoshis

https://jochen-hoenicke.de/queue/#BTC%20(default%20mempool),24h,weight

Binance (if it is real) did choose a good time to create panic on newbies. They will feel more panic when their transactions need too long time to get a first confirmation. Taking this congestion, I remind people to use an opt-in Replace-by-Fee (RBF) for their transaction. So if their transactions stucked, they can bump the fee.

It's either prevention for mass withdrawals, or the community became more paranoid after the second biggest exchange has scammed the community. For me, it's probably just coincidence. But if it's as a prevention for another exchange "bank run", then I believe the result would be a positive, not only for the exchanges, but for the community as well, no? We don't want another crash.

It is not to prevent mass withdrawals. Exchanges already charge very expensive withdrawal fee on users. Their fees are fixed and expensive because they over charge users.

Binance did not reduce or increase their withdrawal fee on Bitcoin. https://www.binance.com/en/fee/cryptoFee

[ABCbits]

Or is he trying to combine his coins for when people start to massively withdraw from his scam exchange so he can charge his users massive fees

I just checked their current BTC withdraw fee and found it's 0.001BTC (about $16.9). I'm sure the fee was 0.0005BTC or lower few months ago. It's unlikely they perform consolidation with such high fees, so your speculation could be right.

The actual BTC withdraw fee is 0.0002BTC (about $3.4) for "Bitcoin" and 0.0005BTC (about $8.5) for "BTC(SegWit)". Thank you @DdmrDdmr for the correction.

[hZti]

Or is he trying to combine his coins for when people start to massively withdraw from his scam exchange so he can charge his users massive fees

I just checked their current BTC withdraw fee and found it's 0.001BTC (about $16.9). I'm sure the fee was 0.0005BTC or lower few months ago. It's unlikely they perform consolidation with such high fees, so your speculation could be right.

Those fees are a massive ripoff if you consider how cheap you can send bitcoins and also how important it is for people to move the coins from the exchange as soon as possible. So far it seems tja there are more coins flowing into the wallets than out of them.

[Findingnemo]

Or is he trying to combine his coins for when people start to massively withdraw from his scam exchange so he can charge his users massive fees

I just checked their current BTC withdraw fee and found it's 0.001BTC (about $16.9). I'm sure the fee was 0.0005BTC or lower few months ago. It's unlikely they perform consolidation with such high fees, so your speculation could be right.

Those fees are a massive ripoff if you consider how cheap you can send bitcoins and also how important it is for people to move the coins from the exchange as soon as possible. So far it seems tja there are more coins flowing into the wallets than out of them.

Making money while ripping other people by forcing them to pay a lot or wait for days.

156 blocks? That is the biggest number I have seen in this year! And it seems still the consolidation is in process cause incoming transactions doesn't seems to be decreased.

[yazher]

It's either prevention for mass withdrawals, or the community became more paranoid after the second biggest exchange has scammed the community. For me, it's probably just coincidence. But if it's as a prevention for another exchange "bank run", then I believe the result would be a positive, not only for the exchanges, but for the community as well, no? We don't want another crash.

Let's just hope we won't see another bad scenario again because the timing cannot be worse than this after the FTX has been hacked and its users are in panicked, some of the people are withdrawing their funds from exchanges all around the crypto industry to prevent the same thing happen to them. We cannot blame them because they are just being realistic and the result will be a disaster if Binance will become like that's why let's not assume the worse rather we just hope all goods for them.

[stompix]

Spamming mempool now means more panic to the average Joe in these days he's overly panicked. Does he want to make people change their minds about withdrawing from exchanges? Or does he try to cover some exchanges that can now claim withdrawing issues? I don't know.

As much as I dislike CZ and Binance, spamming is not really the word here.
I said it when the FTX drama was going down, with everyone rushing to get their $10 or even $5 out of that exchange you're going to have a delay, and if the same happens now at Binance they have no choice as to start consolidating all the deposits of everyone to either pay up or use the satoshis deposited.

Looking at this kind of tx:
https://mempool.space/tx/0672e85e5f95fe7ad3bc3c23d39c1c0d499d00e00be6015fbb1def102446bc4d
Imagine you have $1k in 200 inputs, and this is one for hundreds of deposits, if they are running low on coins they must do this, there is no other way.

If they touch the cold wallet there is panic!
If they touch the reserve deposit there is panic!
If they consolidate the wallets there is panic!
If withdrawals are delayed for more than a day, there is panic!

Besides, isn't this what we're preaching for, for everyone rushing to get their coins out?

And if he really wanted to panic the markets he would have put something double, what's an extra 20 BTC for him, especially since his own pool will be mining one-seventh of it?

[franky1]

for the subject of 'consolidating assets'

i can understand that exchanges might have multiple coldwallets of that exchanges customers reserves. and sometimes for audits its best to bring them all into a super cold wallet to show control of all the wallet funds..

nothing against that.

i understand they also have thousands of hotwallets (the on exchange customer deposit addresses) which can take alot of "spam" tx to sweep.

my concern over all is if an exchange has had alot of customers funds in wallets of DIFFERENT exchanges where they were using customer funds in other exchanges for one exchanges corporate profiteering.. which should not be happening

..
if binance is just sweeping deposit addresses to fill mempools.. yea he should have done it periodically over time instead of an all at once.. but i dont mind it too much as in a few weeks it will settle down

but if he is sweeping. and then moving those same funds again the same day, repeatedly.. then thats an assy move and true spam that is unneeded and unwanted by the community

[NeuroticFish]

Imagine you have $1k in 200 inputs, and this is one for hundreds of deposits, if they are running low on coins they must do this, there is no other way.

You do have a point, but they could:
* do much fewer batches of consolidation if they want to // no need to do all in one day
* do partial consolidations together with the actual user withdrawals (that would be imho a smarter implementation).

Besides, isn't this what we're preaching for, for everyone rushing to get their coins out?

This is a good question and I will come with two thoughts (although one of them may need its own different topic) :
* many traders (ie not actual newbies) could think "if the mempool is this congested, why would I withdraw? I will have to pay a lot to send back when I want to sell" // maybe this is one of CZ targets?
* what if, while we were cheering this year for how much bitcoin has left the exchanges in 2022, this was more due stealing/working on fractional reserve than user withdrawals? (I know, this may be a bit paranoid though).

[Queentoshi]

Could this be related to this.


I initiated a transaction on my electrum wallet (almost 24hour now) and that has been the error message saying that ''my transaction fee is too low to fit into its mempool, that there are many other transactions with higher paying fees, and I should increase my fee.'' 

[Findingnemo]

Could this be related to this.


I initiated a transaction on my electrum wallet (almost 24hour now) and that has been the error message saying that ''my transaction fee is too low to fit into its mempool, that there are many other transactions with higher paying fees, and I should increase my fee.'' 

Yes, you should increase your fee for your transaction to get into the mempool.

Or you can try using mempool feature under fee tab instead of static or other so you can choose how much fee required for the next block.

Also you can use https://mempool.space/ to know required fee for fast confirmation.

[o_e_l_e_o]

As I mentioned earlier in another thread, it is not impossible that there is a malicious reason behind Binance specifically choosing to this now, when they could instead of done it at 1 sat/vbyte at a steady stream any time over the last many months, saving themselves a huge amount in unnecessary fees in the process. Perhaps that is what they were planning to do in the future, but are now in the midst of their own liquidity issues and are scrambling to consolidate everything they can to keep processing withdrawals.

Meanwhile, they bump their withdrawal fee to absolutely ridiculous levels - 100,000 sats! - to encourage people either not to withdraw at all, or to "withdraw" on one of their centralized scam IOU chains which are not back by real bitcoin at all. I've spoken many times in the past about how Binance's withdrawal fees are literal robbery, and now they've doubled them!

Honestly, if you still have coins on Binance thinking they are "too big to fail" or some other such nonsense, not only are you wrong and risking everything, but you are also being massively ripped off by these charlatans.

[Woodie]

I just checked their current BTC withdraw fee and found it's 0.001BTC (about $16.9). I'm sure the fee was 0.0005BTC or lower few months ago. It's unlikely they perform consolidation with such high fees, so your speculation could be right.

CZ at it again, if he isn't covering up something... maybe trying to raise funds to help other exchanges that reached out for some financial help without using his emergency fund and this is certainly one way to cash in easy through TX fees.

If not this could be a monopoly game that is aimed to cause panic that will hurt smaller exchanges and will all be at his doorstep for financial aid.

[stompix]

You do have a point, but they could:
* do much fewer batches of consolidation if they want to // no need to do all in one day
* do partial consolidations together with the actual user withdrawals (that would be imho a smarter implementation).

Playing devil's advocate (with a disclaimer that I know my client is worse than satan  )

- we don't know how many coins they have that they can't actually spend, and we don't know if they are not scraping every satoshi at this point
- maybe the wallets are under different supervision? Actually, this does make a lot of sense to me as I would want to limit the access of every single individual.
Yeah, it's a stretch but this is the best I can come up with.

* what if, while we were cheering this year for how much bitcoin has left the exchanges in 2022, this was more due stealing/working on fractional reserve than user withdrawals? (I know, this may be a bit paranoid though).

Highly possible!
I've said like ten times this week, all these companies have costs to run, if there is no money flow they will need to either take loans or find "investors", when these options run out, you touch the honeypot and you promise yourself you will cover the losses tomorrow, then next month and so on.

To be honest, this is so messed up I don't know what will be good or bad for the ecosystem right now, I'm wondering if those morons have played with a fractional reserve, and they don't have our coins if a bulls run starts, we hit 100k and everyone rushes to sell and take the profit, will the inflow be able to cover the losses or they won't be able to buy back the coins and honor the deposit, triggering a drop worse than ever?

[DaveF]

You do have a point, but they could:
* do much fewer batches of consolidation if they want to // no need to do all in one day
* do partial consolidations together with the actual user withdrawals (that would be imho a smarter implementation).

Playing devil's advocate (with a disclaimer that I know my client is worse than satan  )

- we don't know how many coins they have that they can't actually spend, and we don't know if they are not scraping every satoshi at this point
- maybe the wallets are under different supervision? Actually, this does make a lot of sense to me as I would want to limit the access of every single individual.
Yeah, it's a stretch but this is the best I can come up with.

* what if, while we were cheering this year for how much bitcoin has left the exchanges in 2022, this was more due stealing/working on fractional reserve than user withdrawals? (I know, this may be a bit paranoid though).

Highly possible!
I've said like ten times this week, all these companies have costs to run, if there is no money flow they will need to either take loans or find "investors", when these options run out, you touch the honeypot and you promise yourself you will cover the losses tomorrow, then next month and so on.

To be honest, this is so messed up I don't know what will be good or bad for the ecosystem right now, I'm wondering if those morons have played with a fractional reserve, and they don't have our coins if a bulls run starts, we hit 100k and everyone rushes to sell and take the profit, will the inflow be able to cover the losses or they won't be able to buy back the coins and honor the deposit, triggering a drop worse than ever?

The other possibility, which I thought of while sitting in the bathroom, what if they are really so messed up on the back end they don't know how much money they can pull together.

They have a database that says we have X, they have wallet addresses that say they have Y, due to crap programming they really have Z. Because they have a bunch of addresses with dust that can't move and a bunch more with such small amounts that even at 1 sat / byte it just does not pay to move them.

They have done this before, the combining of a massive amounts of coins, and unless it is for security or audit reasons there is no point to do it except for manipulation or profit.
I will say that security and audit are both weak in my opinion. Security should be the same for 1 sat or 1000BTC
Audit should also not matter you either have the funds or you don't.

-Dave

[NeuroticFish]

They have a database that says we have X, they have wallet addresses that say they have Y, due to crap programming they really have Z. Because they have a bunch of addresses with dust that can't move and a bunch more with such small amounts that even at 1 sat / byte it just does not pay to move them.

This is possible, especially as in certain places they work with less digits after decimal point (was it 5?) instead the normal 8 (where I would use actually 9 to be on the safe side).
But:
* I don't think that those satoshi make much of a difference, even if it's for audit
* it's clearly not a good enough reason for such high fees for so many tx, they could have been doing it with minimal fee

[hZti]

They have a database that says we have X, they have wallet addresses that say they have Y, due to crap programming they really have Z. Because they have a bunch of addresses with dust that can't move and a bunch more with such small amounts that even at 1 sat / byte it just does not pay to move them.

This is possible, especially as in certain places they work with less digits after decimal point (was it 5?) instead the normal 8 (where I would use actually 9 to be on the safe side).
But:
* I don't think that those satoshi make much of a difference, even if it's for audit
* it's clearly not a good enough reason for such high fees for so many tx, they could have been doing it with minimal fee

It is true that they loose way to much money on this for it being just a normal process. If I would be a user of Binance I would not touch them again. Maybe it is their plan to scare people into withdrawing and accepting the very high fee for it. In the end there is not a problem at all, but they made a huge profit for doling exactly nothing of value. But since nobody knows I would still not leave any Bitcoin in their wallet.

[DdmrDdmr]

<…>

I believe that the image is actually showing the Minimum Withdrawal amount, not the Withdrawal fee, which on the Bitcoin network is 0.0002 BTCs (3,39 $).

I’ve gone over some of the recent achieved pages on TheWayBackMachine, and at least since May 2022, BTC fees are the same on the Bitcoin Network (no so on other chains):

https://web.archive.org/web/20221113214837/https://www.binance.com/en/fee/cryptoFee
https://web.archive.org/web/20221006095230/https://www.binance.com/en/fee/cryptoFee
https://web.archive.org/web/20220813163621/https://www.binance.com/en/fee/cryptoFee
https://web.archive.org/web/20220512162950/https://www.binance.com/en/fee/cryptoFee