Binance, the world’s largest cryptocurrency exchange, temporarily suspended USD Coin (USDC) withdrawals on the Arbitrum One network on May 22, disrupting a critical transfer for trader James Wynn and reigniting concerns over the centralization risks in decentralized finance (DeFi).
Wynn, known on the social platform X as @JamesWynnReal, attempted to transfer USDC from Binance to an external wallet to shore up a highly leveraged position on trading platform HyperLiquid. He was met with a notice that Arbitrum One withdrawals were “SUSPENDED,” while other networks—such as zkSync Era, CELO, Solana and Stellar—remained available, with estimated withdrawal times ranging from one to 13 minutes.
“I was trying to add money from Binance to my external wallet to fund HL to save myself from a potential major liquidation,” Wynn posted at 06:02 UTC. “Coincidence? Unlikely,” he added, suggesting that the suspension occurred at a suspiciously inopportune moment.
Arbitrum One, a layer-2 Ethereum scaling solution, is prized for its low fees and fast transactions. The suspension, however, left Wynn unable to move his funds during a period of intense trading pressure.
The incident quickly drew attention on X, where users debated the cause of the suspension. A user known as @The_Prophet_ (SightBringer) suggested the issue likely stemmed from automated risk management systems at Binance, possibly due to liquidity constraints, network congestion or bridge validator issues. “There’s a 70% chance it was a backend risk flag,” they estimated, downplaying the likelihood of targeted suppression at just 1%.
Binance has not issued a public statement on the matter. However, similar disruptions have occurred multiple times in recent months, according to user reports. @CookerFlips noted repeated suspensions of USDC withdrawals via Arbitrum since early 2025.
A 2024 report by crypto infrastructure firm AlphaPoint affirmed that exchanges often pause withdrawals during volatile periods to manage liquidity and bridge-related risks. Despite the DeFi sector’s decentralized premise, many of its operations—including stablecoin transfers—rely heavily on centralized infrastructure.
“Customers shouldn’t suffer anything like this,” Wynn later responded in a thread, questioning whether an internal Binance issue had caused the halt. He eventually resolved the situation without requiring the blocked funds, as confirmed in an exchange with user @captainwagmi.
The episode has reignited broader criticisms of centralized exchanges within DeFi. Some users, including @RoB_sol_, accused Binance of becoming a “weaponised globalist cabal” following regulatory action against former CEO Changpeng Zhao in 2024. Others, like @ChartFuMonkey, urged traders to consider alternatives such as Kraken, citing more consistent service despite higher fees.
The incident underscores an enduring paradox within crypto: the promise of decentralization remains constrained by central points of failure. As Binance and others expand support for DeFi tools like Arbitrum, calls for robust, decentralized infrastructure are only intensifying.
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