On the 25th of Dec 2022, a Reddit user named Dr. Antarctica announced that Binance has restarted withdrawals of Monero on the Binance platform, though it might be temporary.
Monero is a cryptocurrency built with the intention of absolute anonymity of transactions. This means the transactions are not linkable or traceable, making it impossible to make connections between two Monero transactions.
Since it is difficult to know the source or destination of funds and the number of funds held by the user, some users are attracted to the project. The blockchain can track each transaction and record them, but it employs unique cryptography that blots out details such as the amount, source, or destination of a transaction.
Unlike BTC, Monero’s design is more akin to the concept of cash transactions. If one is not a party to a cash transaction, it is difficult to know the details as there is usually no accessible record of its execution. This is why the usage of Monero in centralized platforms posed a significant problem.
In April 2022, rumors spread that centralized exchanges were transacting with “paper Monero.” Cryptocurrencies that were not backed by reserves. The central bank has reserves to support the country’s currency in a traditional finance structure, but that establishment was missing in the crypto space.
Since Monero obscured the details of funds held in wallets, it’s difficult to confirm the amount of funds held by these platforms. So on the 18th of April 2022, holders of Monero planned a bank.
The aim was to ascertain if these crypto exchanges held the amount of Monero assets they were making available to their users. Thus they asked all users to withdraw their assets at the same time on the 18th of April, which was also Monero’s 8th anniversary.
Instead of providing transparent reports and audits, Binance and Huobi chose to freeze the withdrawal of funds so that their lack of appropriate funds would not be brought to light. Huobi claims it was having difficulties due to some wallet upgrades, which is why Monero users couldn’t withdraw or deposit funds.
Binance, on the other hand, didn’t provide a reason, simply showing a “withdrawal suspended” status on its platform. But it would seem that after more than 8 months of suspension, Binance has temporarily opened access for users to withdraw their assets.
In response to Dr. Antarctica’s post, some users pointed to this as one of the dangers of giving their assets to centralized platforms.