Coinbase Back Online After Major Outage, But Withdrawal Issues Persist

Coinbase announced that it has made a full recovery after the outage, but some users are still struggling with withdrawal issues.

Coinbase experienced a major system-wide outage on May 14. Although the exchange was able to recover from the outage, many users are still very unhappy about the still ongoing withdrawal issues. This was the second outage for Coinbase in 2024 so far. Meanwhile, other exchanges like OKX are growing, with OKX expanding its presence in the Asia-Pacific, specifically transitioning to a locally regulated entity in Australia. Additionally, Binance saw an impressive 72% increase in futures trading volumes during the month of April.

Coinbase’s System-Wide Outage

Coinbase crypto exchange experienced a system-wide outage early on May 14, which impacted users trying to access its services via desktop and mobile. The outage started at 4:15 am UTC. Coinbase also confirmed the “major outage” on its official status page. Visitors to the Coinbase website were met with a "503 Service Temporarily Unavailable" error, which typically suggests that the site is down because of maintenance or overwhelming traffic.

The exchange's support team on X communicated actively about the outage and assured users that their funds were still secure and that they were working to fix the issue. This latest outage was not Coinbase’s first struggle of 2024. On Feb. 28, something very similar happened where Coinbase and other exchanges went down because of a sharp increase in crypto trading activity that was triggered by a large BTC price fluctuation.

Interestingly outages like this are sometimes viewed optimistically by the crypto community. Some people argue that high traffic volumes leading to these disruptions mean that there is a growing interest and engagement with cryptocurrency, suggesting a bullish future for the market.

Continued Withdrawal Issues After Outage Recovery

Luckily, Coinbase was able to recover from the outage after it lasted for about three hours. Despite the recovery announcement, some users are still facing issues with withdrawals and transfers, which is contradicting the exchange's updates. Many people took to X to share their frustrations. Some people are even pushing Coinbase to fact-check its claims of a full system recovery.

The cause of the outage is still not clear, but Coinbase has committed to further investigate what happened.

For many, this outage places a lot of emphasis on the vulnerability of centralized exchanges, which serve as primary gateways for mainstream users entering the crypto market. This means that any issues on centralized exchanges could cause some damage to the crypto industry’s reputation.

In contrast, decentralized exchanges (DEXs), offer a more complex user experience, and have much lower trading volumes. On Monday, DEXs saw more than $585 million in global trading volume. This was only a fraction of the $4.6 billion in trading volume amassed by centralized exchanges.

What is a Centralized Exchange?

Centralized cryptocurrency exchanges are platforms where users can buy and sell cryptocurrencies, and they act as crucial hubs for digital currency transactions. Despite cryptocurrencies being typically associated with decentralization, these exchanges are centralized as they are managed by a single entity that facilitates trades, maintains liquidity, and secures transactions.

These exchanges are vital for the crypto industry because of their important role in making digital assets more accessible. They are very often the main way for investors to enter the crypto market. The success of these platforms mostly depends on factors like trading volume. Higher trading volumes generally reduce volatility and the risk of market manipulation, which then increases stability in the exchange.

Volatility is a major consideration since the value of cryptocurrencies can fluctuate rapidly within the time it takes to complete a transaction. Exchanges with high trading volumes and quick processing times can mitigate the impact of these fluctuations, making them very attractive for people who are looking for a bit more stability in their transactions.

Meanwhile, decentralized exchanges operate without a central authority. These platforms facilitate peer-to-peer trades by using smart contracts and atomic swaps, which reduces the need for intermediaries and potentially lowering the risk of central points of failure. However, decentralized exchanges are less common and still face some challenges like lower liquidity and regulatory hurdles, especially in the U.S.

Overall, while decentralized platforms may represent a more ideologically aligned version of cryptocurrency's foundational principle of decentralization, centralized exchanges still currently dominate the market.

OKX Expands in Australia

While Coinbase battles with the outage backlash, things are going much better for OKX. The crypto exchange is strengthening its presence in the Asia-Pacific region by moving its Australian operations into a locally regulated entity. OKX president Hong Fang shared his excitement about the potential of the Australian market during a media event in Sydney, and he is very intrigued by the sophistication and tech-savviness of local investors.

Since March, OKX has transitioned its services from a Seychelles-based entity to the on-shore entities OKX Australia Pty Ltd and OKX Australia Financial Pty Ltd. OKX Australia Pty Ltd handles the crypto exchange while OKX Australia Financial Pty Ltd deals with its derivatives and margin products.

On the other hand, Australia also poses some very unique regulatory challenges, like requiring local users to qualify as wholesale clients under the Corporations Act 2001. Despite these hurdles, Fang praised Australian regulators for their transparent approach. However, in order to be compliant with local regulations, OKX was forced to discontinue some services, like copy trading and yield-bearing products, as well as trading for specific tokens.

Fang did not touch on payment and banking partnerships but he is confident in their stability. OKX is the world's third-largest exchange by volume, and saw $2.2 billion in transactions over the last day, according to CoinGecko.

April's Mixed Fortunes

In April, the overall derivatives trading volume on the major exchanges witnessed a slight 1.4% decline from the previous month, according to WuBlockchain. However, Binance saw an impressive 72% increase in futures trading volumes during the same period. This surge was largely attributed to a promotional discount on USDC perpetual contracts that started after Binance's founder Changpeng Zhao faced serious legal troubles for violating the Bank Secrecy Act.

Despite Binance's boost in activity, the broader market experienced a downturn. When excluding the increased volumes from Binance, the total trading volumes across all platforms in April fell by 26.6%. The largest declines were recorded by Bitget at 16.1%, at 15.6%, and HTX at 13.4%.

The spot trading market was hit even harder, with an almost 38% decrease in volume month-on-month. Among the exchanges, was the only platform that reported an uptick, with a 13.7% increase in activity. Others like Kucoin and Upbit saw dramatic falls, with reductions of 70.8% and 57.5%, respectively. Bitfinex also saw a big 47.7% drop.