The Half-a-Million-Dollar Mistake
In an unforeseen error, cryptocurrency services company Paxos paid a staggering $500,000 bitcoin (BTC) fee for a transaction merely worth $2,000. This oversight, as described by Paxos, resulted from a “bug.”
How Did This Happen?
Every Bitcoin transaction incurs a fee, paid to miners who validate and record these transactions on the blockchain. The more you pay, the quicker miners will process your transaction, given the incentive of larger rewards.
However, on a typical day, these fees fluctuate between $5 to $20. Yet, due to an apparent glitch in Paxos’s operations, the company shelled out 20 BTC, equivalent to over $515,000, to transfer just 0.7 BTC (worth less than $2,000).
Who’s the Beneficiary?
Stake.fish, a prominent mining entity, confirmed this expensive transaction. Chun Wang, the founder of Stake.fish, mentioned in a post that the originator of this transaction had a three-day window to lay claim and possibly get a refund.
Time’s Up! Or Is It?
Although Paxos probably reached out to Stake.fish to claim this hefty fee, Wang hinted that their request came post the stipulated deadline, pointing out timezone disparities. The potential confusion between EST and EDT/UTC further irked Wang, recalling a similar instance with a Zcash representative.
Community’s Verdict?
Wang’s post included a poll to grasp community sentiment on how to address the massive fee. With 1,700 votes cast by the Asian afternoon, the majority (37%) felt the fee should reward miners. 27% believed Paxos should reclaim the funds, while the rest were split between freezing the Bitcoin or a 50/50 distribution between Paxos and miners. Cosmos developer @chjango weighed in, advocating for the 50/50 division, pointing out Paxos’s industry experience and hinting at the blunder’s novice nature.
Paxos Owns Up
To clear the fog, Paxos confirmed the erroneous $500,000 transaction emanated from one of their servers. In an official statement, the company reassured that the hiccup only affected their corporate operations and all client funds remain unscathed. While initial speculation hovered around PayPal’s potential involvement due to wallet associations, Paxos cleared the air, asserting the mishap was solely on their end.
Precedents Exist
This isn’t the first instance of a costly transaction mistake. A 2019 Ethereum user misplaced over $300,000 by inputting incorrect values. Luckily, they recovered 50% of the lost amount. Another user in 2020 overpaid $9,500 for a mere $120 trade, leading to their assertion that the mistake had life-altering consequences.
Paxos’s Next Steps
Paxos is presently liaising with the responsible mining company to recoup the erroneous fee. Given the past instances of miners returning misplaced amounts, it’s a space worth watching for developments.
