Don't Transfer Ethereum From Binance to Bitstamp

When it comes to transferring funds from exchange to exchange, best practises dictate to first transfer to a personal wallet and then to the exchange of choice. I was careless the other day and tried to move some Ethereum from Binance to Bitstamp. It took longer than expected.

An hour later, I got an "out of gas" error in the transaction hash. Normally the Ethereum should have returned back to my account but this was not the case. I am not an expert with smart contracts but this is what I think happened.

Exchanges like Kraken use newly generated deposit addresses. You shouldn't have problem with it but still, you can better transfer to a personal address first. This means that they act much like your personal wallet addresses. Exchanges like Bitstamp and Binance have client smart contracts. In other words, the customer has a dedicated address to deposit all ERC-20 related tokens to it. This wallet though has to first go through a smart contract wallet that is owned from the exchange.

When one tries to send money from exchange to exchange and both use smart contracts, an out of gas error occurs because the amount of gas cannot be determined off the initial amount. Add to that the Binance token scheme for reduced exchange fees and you can understand how this can turn into a big mess. The funds get stuck in the second address of the exchange and someone has to "push" them with extra gas/fee in order to reach the other smart contract destination. Form the customers perspective though the funds don't show up anywhere and seem lost and this can cause a little bit of panic.

TL;DR Don't transfer funds between exchanges because they might get stuck and it will take months for your to recover them considering the current traffic. Transfer first to your personal account and then to the exchange just to be sure.