Paxos Overpays $500,000 in Bitcoin Transaction Fee

Paxos Admits Costly Transaction Error

Paxos, a notable crypto firm, has acknowledged a significant error involving a $500,000 transaction fee overpayment on a Bitcoin transfer conducted on September 10. This mistake stemmed from a bug affecting a single transaction, and the company has reassured stakeholders that customer funds remain secure, with the issue impacting only corporate operations.

Clarification on PayPal's Involvement

Initial rumors suggested that PayPal might be linked to the erroneous transaction due to an associated wallet identified by an analytics platform. However, Paxos has confirmed that PayPal was not involved in this mishap.

F2Pool's Role and Recovery Efforts

The transaction was validated by Bitcoin mining pool F2Pool, which expressed willingness to return the funds if a claim was made within three days. Otherwise, the fee was set to be distributed among the pool's contributors. Paxos is currently in talks with F2Pool to recover the overpaid sum.

Details of the Transaction

The error was discovered shortly after it occurred, revealing that approximately 20 BTC, valued at over $515,000 at the time, was paid to transfer merely 0.07 BTC, worth less than $2,000. It was suggested that the sender could be an exchange or payment processor with faulty software, evidenced by over 60,000 transactions from the same address.

Previous Instances of High Transaction Fees

This incident is not isolated in the crypto world. Past occurrences, like the 2019 Ethereum user who lost over $300,000 due to a mispaste, and a 2020 case where $9,500 was paid for a $120 trade, highlight the prevalence of costly errors in cryptocurrency transactions.

Paxos, renowned for issuing stablecoins such as PayPal USD and operating a crypto brokerage, continues to address this significant financial error, aiming to prevent similar incidents in the future.