Paxos Admits to $510K Bitcoin Mistake

Crypto firm Paxos has acknowledged that it was responsible for a Bitcoin transaction that incurred an unusually high fee of around $500,000 earlier this week.

The company told Decrypt that the excessive fee was paid to the Bitcoin network on September 10, attributing the mistake to a bug that affected only one transfer. The issue has since been resolved.

The spokesperson for Paxos further emphasized that the incident had no impact on their clients or end-users. “All customer funds are safe,” the spokesperson assured, indicating that the error was confined to the company’s internal operations.

The transaction in question drew immediate attention from blockchain analysts earlier this week, sparking widespread speculation about the identity of the party responsible for the mistake. Some even humorously referred to the exorbitant fee as a “gift” or “offering” to Bitcoin miners, who are compensated through such fees for their role in maintaining the network’s security.

Typically, transactions with higher fees are processed more quickly by miners. However, the average transaction fee on the Bitcoin network usually ranges between $1 and $3. Paxos revealed that it is currently negotiating with the miner who received the inflated fee to recover the overpaid amount. The fee for the transaction was 19.89 BTC, a stark contrast to the 0.074 BTC value of the actual transfer.

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According to a report published by The Block on September 11, this mistake set “a record for the most expensive transaction fee paid in U.S. dollars for a single Bitcoin transaction.”

Casa CTO Jameson Lopp had this to say:

The Block’s report added:

“The transaction fee went to Bitcoin mining pool F2Pool, which mined the block containing the transaction. Chun Wang, co-founder and administrator of F2Pool, said the 20 bitcoin will be put on hold for three days in case the originator wants to claim it. If unclaimed during that period, it will be paid to its pool of bitcoin miners.“

Featured Image via Pixabay

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• Source: https://www.cryptoglobe.com/latest/2023/09/paxos-admits-to-mistakenly-paying-a-500k-fee-for-a-single-bitcoin-transaction/